Planning
Business plan
Describe the project: the AI expert will suggest how to build a business plan for a bank, an investor or a state support application, covering the project and its market, the production and marketing plans, capital expenditure, sources of financing, the financial plan and the risks.
Question: "The bank asks for a business plan for project finance. What matters most?"
Answer: "The ability of the project to service its debt. The bank looks at the cash flow forecast year by year and the debt service coverage ratio (DSCR), the cash flow available for debt service divided by the loan payments, which as a rule should be at least 1.2–1.3. It also looks at the sponsor's equity contribution, the collateral and the sensitivity of the project to price, sales volume and construction time."
Financial model
Ask how to build a financial model of a project or a company and check its calculations: revenue and cost forecasts, working capital, capital expenditure, financing, cash flows, NPV, IRR, DSCR, scenarios and sensitivity analysis.
Question: "The project has a positive NPV, but the bank declined the loan. Why?"
Answer: "NPV shows the value of the project to its owners over its whole life, while the bank looks at each year: while the project ramps up, the cash flow may not cover the loan payments and DSCR falls below 1. In the model this is solved with a repayment schedule matched to the cash flow, a grace period on principal during construction or a larger equity share."