Investointilainan

Investointilainan, meaning 'investment loan' in Finnish, is a loan product for financing capital investments by businesses or individuals. It funds long-term assets or projects expected to generate future cash flow or appreciation, such as equipment, facilities, real estate, or product development. Funds are typically earmarked for a specific project and disbursed in tranches as milestones are met.

Lenders assess creditworthiness from financial statements, business plans, projected cash flow, and collateral. Common collateral includes the financed asset itself, other property, or guarantees. Terms span several years with amortization aligned to the asset's expected life. Interest rates can be fixed or variable; fees include arrangement, underwriting, and appraisal costs. Some investment loans allow staged drawdowns as work progresses.

Risks include leverage, interest-rate exposure, overruns, and market downturns. Borrowers should consider covenants and the potential impact on liquidity. Tax treatment of interest deductions varies by jurisdiction and can influence the overall cost of the loan. The instrument is typically offered by banks and specialized lenders and can be part of broader financing structures such as project finance or asset-backed lending.

See also: loan, project financing, collateral.