Financing from international sources is possible in two ways: Corporate Finance and Project Finance.
The first type of financing is with full commitment and repayment of the project’s financial obligations is possible through all of the company’s assets. The second type of financing is with limited or no commitment and the source of repayment of the project’s obligations is the income from the sale of products and capital related to the project. The second type of financing is more acceptable to the executive bodies.
In both cases, finance is a short-term method of transferring capital to the country because after the loan repayment period, the principal must be returned along with its interest. Therefore, the most important condition for receiving a foreign currency loan is having economic justification and an appropriate rate of return on capital.
Financing agreements generally contain provisions that clearly define and establish the rights, responsibilities, and obligations of the parties. These agreements are concluded between various international sources of financing and users after conducting the necessary negotiations and reaching an agreement.
The clauses in these contracts will include definitions, the amount of the facility, how to use the granted facilities, the repayment period, determining how to resolve disputes, the governing laws, the authorities to handle disputes, the method of guarantee, insurance, and other specific matters.

In short, finance contracts mean that a bank or foreign commercial institution pays a loan to a specific country or company for a specific operation and in fact has no control over its spending and therefore has no obligation to bring the project to fruition and receives the principal and subsidiary payments from the contract or the bank guaranteeing the contract on the specified due dates.

Some features of using finance:
1. It is a very useful method if you have access to facilities with low interest rates and long repayment terms (provided there is appropriate economic justification).
2. If it is possible to sell manufactured products in the short term and with a profit greater than the finance profit, it is considered an effective method.
3. In our country, due to the relatively high fluctuations in foreign exchange earnings, the use of the finance method to finance projects, especially government projects, should be accompanied by greater supervision and control.
4. The risk incurred when receiving foreign loans is the responsibility of the credit recipient (in most cases, the government and state-owned companies), and in any case, repayment of the principal and interest earned from the investment on the specified date is mandatory.
5. Receiving finance credits is only considered to be attracting physical capital and, unlike foreign investment, which in most cases is accompanied by the transfer of technology and technical knowledge, it does not provide any advantage in terms of increasing the country’s industrial competitiveness and accumulating human capital in specialized and educated workers.