Last edited 28 Mar 2018

Project-based funding

Project-based funding (sometimes referred to as project-based finance or project-based lending PBL), is a system of financing a project in which the financial security is provided by the property being acquired or developed itself. This can be an important source of funding for smaller development companies who may not have much security to offer.

Project-based funding can allow them to borrow money on the strength of the development. Larger or better-established companies may be able to borrow on the strength of their market position rather than the security offered by individual projects.

Project-based funding may also used as a way of financing large, infrastructure and industrial projects, based on the projected cash flow of the finished project. In this case, finance structures may involve a syndicate of banks and/or equity investors who provide the project with loans. In the UK this sort of project-based funding has been carried out under the private finance initiative (PFI) and public private partnership (PPP) systems.

The relationships on large projects can become very complicated, with a range of organisations with different interests to protect. Some of the key parties to project finance may include:

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