Alternative finance refers to financial channels, processes, and instrument that have emerged outside of the traditional finance system such as regulated banks and capital markets (Source: Wikipedia).
Then, when we speak about to finance a project, the above description of ‘alternative finance’ means that the project owner will not to open a negotiation with a ‘Lender’ (Banks or any other Private or Institutional Financial entity) but he structures a project tailored funding program according the project Cash Flow, the Business Plan and/or other financing needs (according an agreed timing) where he is or he will be the owner/holder of one or more bankable assets, and these assets can be traded in the Secondary Financial Market (SFM); the bankable assets will be traded at a higher price than the original purchase price and the spread between the purchasing price and selling price will be never less than 20 – 25 points (conservative scenario).
As it is easy to understand, the spread between the costs for the issuing and the creation of the instrument/asset and the higher price that a licensed Trade Desk will get for the selling of the asset on the SFM will leverage the original capital.
Now, the issuing of the first tranche of the total contract value, negotiated with the Asset Manager, will take around 3 – 4 weeks, then all the subsequent tranches follow one another every two to three days and in some cases even more than once a day. The structured financing program will stop when the total value of project investment is reached up and available according the agreed program.
You can know all the possible options which is possible to structure and how the stakeholders of each transaction move inside an alternative project funding, simply you have to go through our Contact page.