PROJECT FINANCING

Project financing is a kind of structured financing for setting up of new business, industry, manufacturing plants, textiles etc. It is also useful for expansion and diversification of business, industries, infrastructure projects etc.

Large-scale projects can be funded with project financing, a long-term, non-recourse or limited recourse financing plan that can be paid back with project cash flow once the project is finished.

Below are the characteristics of the project financing:

• It is ideal for capital intensive ventures
• Risk allocation between financial institution and the borrower.
• Loan Repayment with the project Cash Flow
• Feasibility of the project available to the lender and make him comfortable with financing.
• The Special Purpose Vehicle is in charge of keeping an eye on project-related assets and supervising project operations. As per the loan terms, the relevant organization will become the owner of the project once it is finished.
• Zero or Limited Recourse Financing Solution The lenders save time and money by not having to spend it assessing the borrower's assets and credit since they do not own the project until it is finished. Alternatively, the lender may concentrate on the project's viability. If the financial services company determines that there is a possibility that the project will not provide sufficient cash flow to repay the loan after it is finished, it may choose to have limited recourse from the sponsors.
• Projection & feasibility approach followed.

Large-scale projects can be funded with project financing, a long-term, non-recourse or limited recourse financing plan that can be paid back with project cash flow once the project is finished.