Project Finance

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40
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Gjaldgeng
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 Long term financing of industrial and infrastructure project is often referred as project finance. The finances are not based on the balance sheets of their sponsors. Instead, it is based on the flaws of cash of that particular project. Various parties are involved in project finance. A number of equity investors are involved. They are known as sponsors too. A bank or other lending agencies also needs to get involved in order to lend financial support or simply loan for various operations. Often, these kinds of loans are non-recourse loan. Non-recourse loan cannot be paid with general assets or trustworthiness of the project sponsors. These loans are secured and paid with the cash flow of the project only. This method is supported by standard model of finance. Revenue producing contracts and all project assets are used to secure the finances. A lien over the assets is provided to project lenders. Lenders are given privileges are given to the lenders to take control over the project if the related company is facing difficulties or not complying with various terms of the loan.

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