Project Finance Law

Project finance is the long-term financing of infrastructure and industrial projects based on projected cash flow versus the entity's balance sheets. Usually, project financing involves a number of equity investors, known as "sponsors," and a group (or "syndicate") of banks or other lenders. Financing provided through project finance arrangements are typically non-recourse loans that are secured by the project assets and paid entirely from project cash flow rather than from the general assets of the project sponsor. Project finance lenders are given a lien on all assets of the project and are able to assume control of a project if the project company fails to comply with loan terms.

Project finance is often more complicated than alternative financing methods, but is often used in mining, transportation, sports, entertainment, and telecommunication ventures. This is largely due to the risk involved with these types of ventures. While other lenders may not be willing to invest due to these risks, project finance can offer a way to provide capital while simultaneously distributing risk and ensuring profit to investors.

Project finance can be a very complicated method for financing that requires a thorough understanding of contract, securities, and banking laws among others. The resources below will provide additional information, but before attempting to participate in any form of project finance one should obtain the assistance of an attorney. For attorneys in your area, check out the Law Firms page.


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