Debt Finance - Revision history

Ranisha at 08:24, 11 May 2020

2020-05-11T08:24:15Z

Ranisha at 08:23, 11 May 2020

2020-05-11T08:23:00Z

Ranisha: /* Equity */

2020-05-07T20:02:22Z

Equity

Ranisha: /* Further Information */

2020-05-07T20:00:16Z

Further Information

Ranisha: /* Further Information */

2020-05-07T19:46:09Z

Further Information

Ranisha: /* Overview */

2020-05-07T13:36:23Z

Overview

Ranisha: /* Overview */

2020-05-07T13:32:13Z

Overview

Ranisha: /* Overview */

2020-05-07T13:32:00Z

Overview

Ranisha: /* Overview */

2020-05-07T13:31:27Z

Overview

Ranisha at 15:48, 13 March 2018

2018-03-13T15:48:06Z

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 #Common stock: it is usually issued to founders and key employees during the early stages of the company to incentize performance, compensate for low earning and retain key staffs.
 #Preferred stock: it is usually issued to later stage equity investors such as angels, venture captial firms and impact investment funds. They receive proceeds before common stakeholdres and have rights such as boad seats, voting rights and right to information.
-#Equity crowdfunding: allows the sale of registered securities of usually early-stage firms<ref name="The The World Bank, 2020., 2020.: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">The World Bank, 2020.: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.
+#Equity crowdfunding: allows the sale of registered securities of usually early-stage firms<ref name="The The World Bank, 2020.Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">The World Bank, 2020. Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.

@@ Line 89: / Line 89: @@
 #Common stock: it is usually issued to founders and key employees during the early stages of the company to incentize performance, compensate for low earning and retain key staffs.
 #Preferred stock: it is usually issued to later stage equity investors such as angels, venture captial firms and impact investment funds. They receive proceeds before common stakeholdres and have rights such as boad seats, voting rights and right to information.
-#Equity crowdfunding: allows the sale of registered securities of usually early-stage firms<ref name="World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.
+#Equity crowdfunding: allows the sale of registered securities of usually early-stage firms<ref name="The The World Bank, 2020., 2020.: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">The World Bank, 2020.: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.

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 <br/>
 <div><div class="page" title="Page 36"><div class="layoutArea"></div></div></div></div>
 = Equity =
 Companies usually use debt to fund working capital and need equity throughout the lifecycle.
 There are three equity based financing options for the off-grid sector: common stock, preferred stock and equity crowdfunding.
@@ Line 88: / Line 89: @@
 #Common stock: it is usually issued to founders and key employees during the early stages of the company to incentize performance, compensate for low earning and retain key staffs.
 #Preferred stock: it is usually issued to later stage equity investors such as angels, venture captial firms and impact investment funds. They receive proceeds before common stakeholdres and have rights such as boad seats, voting rights and right to information.
-#Equity crowdfunding: allows retai
+#Equity crowdfunding: allows the sale of registered securities of usually early-stage firms<ref name="World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)">World Bank: Funding the Sun : New Paradigms for Financing Off-Grid Solar Companies- https://energypedia.info/wiki/Publication_-_Funding_the_Sun_:_New_Paradigms_for_Financing_Off-Grid_Solar_Companies_(English)</ref>.
 = Further Information =

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 = Further Information =
-*[[Debt_Instruments|Debt Instruments]]
+*[[Debt Instruments|Debt Instruments]]
 *[[Portal:Financing and Funding|Financing and Funding Portal on energypedia]]
 *[[An Overview on Micro Hydro Debt Fund|An Overview on Micro Hydro Debt Fund - Nepal]]

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 <br/>
 <div><div class="page" title="Page 36"><div class="layoutArea"></div></div></div></div>
 = Further Information =
 *[[Portal:Financing and Funding|Financing and Funding Portal on energypedia]]
-*[[An_Overview_on_Micro_Hydro_Debt_Fund|An Overview on Micro Hydro Debt Fund - Nepal]]
+*[[An Overview on Micro Hydro Debt Fund|An Overview on Micro Hydro Debt Fund - Nepal]]
 *[[Financial Instruments & Support for Renewable Energy|Financial Instruments & Support for Renewable Energy]]<br/>
 <div><br/></div>
 = References =
 <div><references /><br/></div>
 [[Category:Financing_and_Funding]]

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 = Overview =
-[[File:Capital structure pyramid.png|border|right|400pxpx|Capital structure pyramid]]
+[[File:Capital structure pyramid.png|thumb|right|400pxpx|Capital structure pyramid]]
 Debt financing comes in the form of loans and requires the repayment of both the principal sum borrowed and interest charged on that principal. Generally financial institutions will only provide debt finance to projects and project developers once the market is mature and therefore often need encouragement to enter the market. Debt finance can be provided to local finance institutions to allow them to on-lend to consumers, to project developers, or debt can be provided directly to a project developer. The debt must be repaid whatever the outcome of the project.&nbsp;<ref name="Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.">Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.</ref>

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 <span style="background-color: rgb(255, 255, 255)">[[Portal:Financing and Funding|► Back to Financing & Funding Portal]]</span>
 = Overview =
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 Debt financing comes in the form of loans and requires the repayment of both the principal sum borrowed and interest charged on that principal. Generally financial institutions will only provide debt finance to projects and project developers once the market is mature and therefore often need encouragement to enter the market. Debt finance can be provided to local finance institutions to allow them to on-lend to consumers, to project developers, or debt can be provided directly to a project developer. The debt must be repaid whatever the outcome of the project.&nbsp;<ref name="Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.">Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.</ref>
-International funds dedicated to development projects such as are provided by '''Multilateral Development Banks (MDBs)''' will often create loans with generous repayment terms, low interest rates and flexible time-frames, such loans are called "soft-loans"<ref name="Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.">Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.</ref>.<br/>Investment and commercial banks can lend money against the assets of the project. In the event of defaulting on the loan the bank can have no other claims other than the assets of the project. This type of financing is based on long-term commercial loan contracts<ref name="Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.">Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.</ref>. However, if the project becomes insolvent then the existing assests is sold to generate cash and debt (bank and other lenders) have precedent over equity. This is because, banks and other lenders provide money for a fixed return (margin) and have no claim on further "upside" (profits) while equity takes greater risks (as payments are received only after all debt claims have been met) and thus there is an assumption that equity investors also receive the additional&nbsp;<span style="font-size: 13.6px; line-height: 20.4px; background-color: rgb(255, 255, 255);">"upside" (profits) if the project exceeds the expectation.<ref>Finace guide for policymakers (pg 16):fckLRhttp://www.bbhub.io/bnef/sites/4/2016/08/Finance-Guide-for-Policymakers-RE-GreenInfra-August-2016.pdf </ref></span>
+International funds dedicated to development projects such as are provided by '''Multilateral Development Banks (MDBs)''' will often create loans with generous repayment terms, low interest rates and flexible time-frames, such loans are called "soft-loans"<ref name="Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.">Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.</ref>.<br/>Investment and commercial banks can lend money against the assets of the project. In the event of defaulting on the loan the bank can have no other claims other than the assets of the project. This type of financing is based on long-term commercial loan contracts<ref name="Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.">Wade, H. (2005). Financing Mechanisms for Renewable Energy Development in the Pacific Islands.</ref>. However, if the project becomes insolvent then the existing assests is sold to generate cash and debt (bank and other lenders) have precedent over equity. This is because, banks and other lenders provide money for a fixed return (margin) and have no claim on further "upside" (profits) while equity takes greater risks (as payments are received only after all debt claims have been met) and thus there is an assumption that equity investors also receive the additional&nbsp;<span style="font-size: 13.6px;  line-height: 20.4px;  background-color: rgb(255, 255, 255)">"upside" (profits) if the project exceeds the expectation.<ref>Finace guide for policymakers (pg 16):fckLRhttp://www.bbhub.io/bnef/sites/4/2016/08/Finance-Guide-for-Policymakers-RE-GreenInfra-August-2016.pdf </ref></span>
 = Senior Debt =