Project appraisal for the purpose of borrowing money

Not only are foreign-invested projects that need to be appraised, but other projects of domestic investors are also required to undergo due diligence to ensure an accurate and appropriate decision.

For businesses, the project formulation and appraisal is also a mandatory requirement when wishing to raise capital from credit institutions. In other words, the investor needs to establish and appraise with certainty to be able to successfully defend against the credit institution, then that credit institution will agree to grant a loan to the project itself.

In addition, the appraisal of investment projects has other purposes

- Evaluate the reasonableness of the project: The rationality is expressed in a synthesis (expressed in efficiency and feasibility) and is expressed in each content and calculation method of the project.

- Evaluate the effectiveness of the project: the projects effectiveness is considered on two aspects, the financial efficiency and the socio-economic efficiency of the project.

- Evaluate the feasibility of the project: This is a very important purpose in project appraisal. A rational and efficient project needs to be feasible. Of course rationality and efficiency are two important conditions for the project to be feasible. But the feasibility must also be considered with the broader content and scope of the project (considering the organizations implementation plans, the legal environment of the project ...).

These three purposes are also common requirements for all investment projects. If a project wants to be invested or financed, that project must meet the above requirements. However, the ultimate purpose of project appraisal depends on the project appraisal subject.

- Domestic and foreign investors appraise feasible projects to make investment decisions.

- Financial institutions (banks, General Department of Investment and Development, etc.) appraise feasible projects to finance or lend capital.

- State macro management agencies (Ministry of Planning and Investment, ministries and ministerial-level agencies, Peoples Committees of provinces and cities ...) evaluate feasible projects to make decisions for investment license or investment license.