- Project plans
- Project activities
- Legislation and standards
- Industry context
Last edited 06 Nov 2018
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.
- Private sector partner/owner: The company or limited partnership established to be at the centre of all contracts for the project.
- Project sponsor: The party taking the active role of managing the project, who often has to cover certain project liabilities or risks.
- Lenders: Parties such as commercial and investment banks who may form a syndicate.
- Agent: Appointed from one of the lenders to act on behalf of the others.
- Account bank: Held by a single lender, all money generated by the project will pass through.
- Equity investors: Lenders or sponsors who do not have an active role in the project but are shareholders.
- Suppliers, contractors, customers: Suppliers of materials, contractors involved in the building, and the customers of the project.
- Construction company: Manages the construction of the project.
- Multilateral credit agencies: Ensure the 'bankability' of a project by providing commercial banks with some protection against political risks.
- Host governments/awarding authorities: National governments may be involved in issuing consents for the project.
- Insurers: In the event of an insurable event, sponsors and lenders look to insurers to cover the losses.
 Related articles on Designing Buildings Wiki
- Bridging loan for property.
- Buyer-funded development.
- Construction loan.
- Construction project funding.
- Equity and loan capital.
- Funding options.
- Funding prospectus.
- Mezzanine finance.
- Off-plan property.
- Private Finance Initiative.
- Private sector.
- Property development finance.
- Shared equity / Partnership mortgage.
- Shared ownership.
- Speculative construction.
Featured articles and news
What future infrastructure provision might look like.
Highlighting the health benefits of home improvement.
Pavilions for music, entertainment, and leisure. Book review.
Broadening our understanding of Dublin’s chequered social history.
The charm of London's Cabmen's shelters.
Future Weather Files research tool looking for feedback.
Exploring the Colour Rendering Index.
Why it's important to find out what went wrong.
ECA reviews the shape of the construction job market.
Why proper room acoustics make a difference.
Initiative puts gas networks on the path to net zero.
WICE Woman Architectural Technologist of the Year 2019.
Traditional low-energy approaches to comfort.
Revisiting the McArthurGlen Designer Outlet in Ashford.
USA In-Use Version 6 is now available.
The rise of architectural barbarism.
In contentious political contexts heritage can be more fractious.