Project LoanProject finance or project loan is the financing of long-term infrastructure, industrial projects and public services using a non-recourse or limited recourse financial structure. The two primary sources of project financing are: Equity and Debt. The debt used to finance the project are paid back from the cash flow generated by the project. Its project loan structure relies primarily on the project's cash flow for repayment, with the project's assets, rights and interests held as secondary collateral. Project finance is especially attractive to the private sector because companies can fund major projects off-balance-sheet.
Every company, in its evolution faces challenges regarding project loan, which need to be addressed proactively. These challenges can stem from:
- Constraint in manufacturing capacity
- Technology up-gradation for manufacturing of new product range (same category)
- Technology up-gradation to address cost advantages
- Surplus reserves and a unique opportunity
- Choice of the appropriate source of project financing