Capital Projects Funding Sources

This assignment delves into the diverse funding options available for developing capital projects. It covers equity funding via shareholder investments, debt funding through debentures, private funding from various organizations and individuals, government grants as public funding, and regional development funds focusing on thematic concentrations like innovation, low-carbon economy, and digital agenda. Understanding these sources is crucial for effective project financing.

P4.1 Sources and distribution of funding of capital projects
Government Funding: Depending upon the
nature of the projects, government has a
wide range of government grants at different
level that are required to fund capital
projects. This is also known as public
funding. A fixed percentage is set on the
limit of public funding.
Regional development fund: It is a program
of European government which focuses its
investments on priority areas known as
'thematic concentration'. The priority areas
covered are:
 Innovation and research
 Low- carbon economy
 The digital agenda, etc.
Development of capital projects
requires lot of funds. These
requirements of funds need to be
raised from various sources. The
fund-raising sources include:
 Equity Funding
 Debt funding
 Government funding
 Regional development
fund
 Private funding
.
Equity Funding: For the development of
capital projects company can raise funds by
offering and issuing equity capital in the
market. The public investing in this equity
will be the shareholder of that company.
Debt funding: funds for capital projects
can be raised through debt that is
debentures for any company. Company
requiring fund can issue debentures in the
open market. Debenture holders are the
external investors of the company having
priority interest in the company.
Private funding: Private funding includes
raising fund from relatively small number
of organizations and individuals. This
includes fund raising from:
 Banks
 Credit unions
 Insurance Companies
 capital lenders
 Individuals, etc.