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:
- 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.
[edit] 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.
- Types of development.
Featured articles and news
Professional practical experience for Architects in training
The long process to transform the nature of education and professional practical experience in the Architecture profession following recent reports.
A people-first approach to retrofit
Moving away from the destructive paradigm of fabric-first.
International Electrician Day, 10 June 2025
Celebrating the role of electrical engineers from André-Marie Amperè, today and for the future.
New guide for clients launched at Houses of Parliament
'There has never been a more important time for clients to step up and ...ask the right questions'
The impact of recycled slate tiles
Innovation across the decades.
EPC changes for existing buildings
Changes and their context as the new RdSAP methodology comes into use from 15 June.
Skills England publishes Sector skills needs assessments
Priority areas relating to the built environment highlighted and described in brief.
BSRIA HVAC Market Watch - May 2025 Edition
Heat Pump Market Outlook: Policy, Performance & Refrigerant Trends for 2025–2028.
Committing to EDI in construction with CIOB
Built Environment professional bodies deepen commitment to EDI with two new signatories: CIAT and CICES.
Government Grenfell progress report at a glance
Line by line recomendation overview, with links to more details.
An engaging and lively review of his professional life.
Sustainable heating for listed buildings
A problem that needs to be approached intelligently.
50th Golden anniversary ECA Edmundson apprentice award
Deadline for entries has been extended to Friday 27 June, so don't miss out!
CIAT at the London Festival of Architecture
Designing for Everyone: Breaking Barriers in Inclusive Architecture.
Mixed reactions to apprenticeship and skills reform 2025
A 'welcome shift' for some and a 'backwards step' for others.