Scheduling phase (pre-investment)

Feasibility study  

Description:

The feasibility study (corresponding to the business plan  mentioned in the first part of the guidebook), is the first step of an investment project. It consists in studying all the aspects of the project in order to assess its chances of success and to decide whether or not it should be invested into it.

• Technical aspects: characteristics of the proposed good or service, possible production methods, required know-how, necessary investments, labour, supplies, production costs.
• Commercial aspects: potential clientele, competition, development opportunities, distribution circuit.
• Legal aspects: legal and statutory framework of the activity.
• Financial aspects (financial plan): estimated receipts, estimated expenses, projected assessments, necessary capital, expected profitability.
• Strategic aspects: analysis of the strengths and weaknesses of the project, of the opportunities and menaces (SWOT analysis).

The feasibility study is useful for the enterprise:

• From an internal point of view, because it serves as decision tool for the entrepreneur;
• From an external point of view, because it will be part of the financing file and will serve to persuade banks and financing institutions of the viability and profitability of the project.

Principle:

Two forms of direct intervention are possible:

• meeting part of the costs associated with the study;
• putting at disposal of experts, part of the cost of whom will be borne by the enterprise.

Direct intervention in case of financing in capital:

When the DFI grants or prepares itself to grant financing in the form of capital (possibly topped up by quasi-capital), financing does not cover the whole investment to be made and the entrepreneur has to look for a supplement in the form of loans. The DFI accompanies him then in the structuring of its financing file and as part thereof, will help him finalising the feasibility study and the financial plan.

Conditions of grant:

The grant of support is submitted to the approval of a file that should contain an accurate budget for the intervention, identify the consultants if they are external people or organisations (and prove the absence of conflict of interests for what regards them) and justify all the expenses that will be done.

Development Finance Institutions

European bilateral institutions:

Only BIO, FinnFund and Simest are proposing a direct intervention submitted to several conditions:

• a maximum amount of intervention (from EUR 100,000 for BIO to EUR 361,000 for SIMEST);
• a maximum part of the costs (between 30 and 70%, depending on the DFI);
• requirement of nationality for Simest (Italian) and FinnFund (Finnish);
• size of the undertaking  (BIO): only SME's are eligible.

European regional institutions:

The CDE grants an intervention based on a file submitted by the entrepreneur-to-be.
When support is granted:

• the intervention is limited to EUR 50,000;
• the enterprise should cover at least 1/3 of the total cost of the study.

African regional institutions:

• The intervention is always associated with a future participation in the financing of the enterprise.

Multilateral institutions:

• The multilateral institutions put gratuitously at disposal of the investors online information tools (see below).