Business is of three categories with reference to the degree of intensity of components used like capital, labor and technology. For capital intensive industries the level of capital involvement is huge. So a sole proprietor cannot finance capital intensive industries. Also financing heavy projects by a single financial institution puts much pressure on the institution’s cash flows. This limitation with the financial institutions could not stop entrepreneurs from setting heavy industry that requires huge amounts of capital. To respond to such demands, financial organizations now have introduced an arrangement known as structured finance options.
Structured finance options truly brought life to modern day heavy industry financing and broadened the security net for financial institutions rather than jeopardizing the operating cash flows. It has opened new scope for the businesses and thus delivering greater values. In this article we will see structured finance options from two perspectives; the financial institution and the business.
Structured finance options are more than a business opportunity for any financial institution. Structured finance options offer:
- Full freedom of arranging the credit program
- Interested parties entering into partnership for execution
- Offers extensive and secured return on investment and healthy interest
- Protected mechanism of securing credits
- Deals with deciding and settlement of credit repayment,
- Extended control of the use of credit even after disbursement
Structured finance options offer complete advantage for financial institutions.
In the context of business firms receiving structured finance options they enjoy great advantages like
- Secured credit program
- Sharing managing skills and expertise
- Freedom of taking decision aided by experts from the bankers
- Risk mitigation
- Levels of protection and security
Considering the impact of such structured financing options we can say that it is greatly contributing to the developing economies around the world.
