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Project Financing
Editor:admin  Date:2014-08-18  Browse:10503 Text Size Print

What is Project Financing 
Project financing is a loan agreement that the lender provide financing to specific projects, for the cash flow generated by the project enjoys debt claims, and to the type of project assets as collateral in financing. It is a kind of future earnings and assets of the project as a financing source of funds to repay the loan and security guarantees. 

Project financing began in the 1930s, American oil field development project, then gradually expand the scope, widely used in development of oil, natural gas, coal, copper, aluminum and other mineral resources, such as the world's largest, with an annual 800,000 tons of copper in Chile in Montpellier Scone Dida copper is achieved through the development of project financing. As an international large-scale mining project financing development projects as an important way of financing the project itself is a good business conditions and completion of the project, the cash flow into use as a repayment guarantee for financing. It does not require an investor's credit or tangible assets as collateral, does not require repayment commitment of government departments, issuing loans to the project company objects specifically for project financing and management established. 

Kind of project financing 
1, non-recourse project financing 
Non-recourse project financing, also known as pure project finance, in this financing, loan servicing rely entirely on the operational effectiveness of the project. Meanwhile, the lending banks to protect their own interests must be obtained from the project has a security interest in the assets. If the project is completed due to various reasons or business failure, its assets or benefit is not enough to pay off all the loan when the loan the bank has no right of recourse to the sponsors of the project. 
2, there is recourse project financing 
In addition to operating income loan programs as a source of repayment and to obtain a security interest, the lender also requires an entity other than the third-party program to provide guarantees. Lenders have the right of recourse to a third party guarantor. But assume responsibility for the debt of the guarantor to guarantee amount provided for in their respective limits, so called limited recourse project financing.

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