Feasibility Studies for Financing Purposes

A comprehensive feasibility study should be submitted as part of the loan application to a financial institution for debt funding of a proposed project. Its scope should include technical, costing, marketing and other aspects pertinent to the project. The technical presentation should be sufficiently detailed to show that the assumpt- ions concerning future performance are realistic. A lender needs to be convinced that the capital and operating cost estimates are conservatively based with adequate allowances included for contingency and escalation. The marketing assumptions determine the level of revenue from which operating cost, debt servicing, and other commitments are to be met. The foregoing aspects establish the economic viability of the project, and are therefore relevant to the risk assessment and cash flow analysis carried out by a potential lender which determine his ultimate lending Decision