Project financing directs funds to an entity called a special project vehicle, or SPV, that oversees the project until it is completed. This structure gives project financing two characteristics — off-balance sheet recording of liabilities and non-recourse financing — that differentiate it from other financing methods.
The initial financing for the project typically then comes from two main sources: project sponsors, who can provide equity financing to support it, and lenders – such as financial institutions – who provide debt financing through long-term loans or bonds. Governments can also play a role in this financing ecosystem.
Project finance is a structured finance solution. It is used to pay for the construction and operation of projects such as wind farms, hydroelectric dams or highways. It is long-term financing. Debt-repayment is mainly based on cash flows generated from the completed project.
Table of Content
| # | Topic | Link |
|---|---|---|
| 1. | What Is Project Finance? Examples, Structure & Trends | Click Here |
| 2. | Project Finance vs Traditional Finance: Key Differences You Must Know | Click Here |
| 3. | What Is Project Finance? Examples, Structure & Trends | Click Here |
