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Bankability is the willingness of well established financial institutions to finance a project or proposal at a reasonable interest rate. It is essentially a function of risk and reputation. The following are illustrative examples of things that impact bankability.
ReliabilityThe long term reliability of components such as the solar modules used in an energy project.Track RecordThe track record of partners in delivering similar projects.InsuranceThe ability to transfer elements of risk with insurance such as a warranty on equipment.Financial StabilityThe financial ratings of entities involved in a project.
Service & SupportA plan is in place to operationalize the project. For example, a wind farm that will be operated by a utility with extensive maintenance capabilities.Marketing & OperationsThe project or proposal has partners with a strong marketing and operational background. For example, a hotel has a management partner that is ready to sell rooms and operate customer service under a well known brand.Risk ManagementProject teams have identified risks and set out a plan for managing them.Compliance & LiabilityThe project complies with laws and regulations and is unlikely to face legal problems.ProfitabilityThe basic economics of the project are sound, well tested and attractive.SustainabilityThe project aligns with the reputation and values of the funding bank. Projects that are beneficial to communities and the environment may be more attractive to financial institutions.|
Type | InvestingProject FinanceBanking | Definition | The willingness of well established financial institutions to finance a project or proposal at an attractive interest rate. | Related Concepts | |
Project Management
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