What is Project Finance?

Category: Finance

1Definition

Long-term financing for infrastructure projects where repayment comes from the project's cash flows, not sponsors.

2Context

Funds major infrastructure like power plants, toll roads, and airports. Isolates project risk from parent companies.

3Example

A wind farm is financed with $500M in project debt, repaid entirely from electricity sales over 20 years.

⚠Common Trap

Project finance isn't just big loans—the key feature is non-recourse or limited-recourse to the project sponsors.

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