Project Finance

AAA

DEFINITION of 'Project Finance'

Defined by the International Project Finance Association (IPFA) as the following:

The financing of long-term infrastructure, industrial projects and public services based upon a non-recourse or limited recourse financial structure where project debt and equity used to finance the project are paid back from the cashflow generated by the project.

INVESTOPEDIA EXPLAINS 'Project Finance'

In other words, project financing is a loan structure that relies primarily on the project's cash flow for repayment, with the project's assets, rights, and interests held as secondary security or collateral.

Project finance is especially attractive to the private sector because they can fund major projects off balance sheet.

RELATED TERMS
  1. Non-Recourse Debt

    A type of loan that is secured by collateral, which is usually ...
  2. Non-Recourse Finance

    A loan where the lending bank is only entitled to repayment from ...
  3. Pre-Money Valuation

    A slang phrased that refers to the value of a company's stock ...
  4. Off-Balance-Sheet Financing

    A form of financing in which large capital expenditures are kept ...
  5. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  6. Infrastructure

    The basic physical systems of a business or nation. Transportation, ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Entrepreneurship

    Getting To Know Business Models

    Learning how to assess business models helps investors identify companies that are the best investments.
  2. Investing

    Off-Balance-Sheet Entities: An Introduction

    The theory and practice of these entities varies greatly. Investors need to learn what they're getting into.
  3. Markets

    Intangible Assets Provide Real Value To Stocks

    Intangible assets don't appear on balance sheets, but they're crucial to judging a company's value.
  4. Fundamental Analysis

    Taking Stock Of Discounted Cash Flow

    Learn how and why investors are using cash flow-based analysis to make judgments about company performance.
  5. Personal Finance

    Testing 3 Types Of Analysts

    Different clients require different research reports. Which type of analyst do you need?
  6. Investing

    Who are Stakeholders?

    “Stakeholder” is used in commerce to describe any party who has an interest in a business or enterprise. Traditionally, stakeholders in a corporation are shareholders, employees, customers and ...
  7. Investing

    Cost and Freight (CFR)

    Cost and freight, called CFR, is a trade term between a buyer and seller. CFR requires the seller to arrange for the transport of goods by sea to the required port. It also requires the seller ...
  8. Professionals

    What are Core Competencies?

    Core competencies are the essence of what a company does well. A business uses its core competencies to make and develop products, goods and services according to its company mission. Core competencies ...
  9. Professionals

    What are Fringe Benefits?

    Fringe benefits are non-monetary compensation employers give to employees. They are often associated with high priced perks given to top executives, but any employee can receive them. Fringe ...
  10. Professionals

    What are Technical Skills?

    Technical skills are specialized knowledge and abilities used to perform a specific task. Technical skills are often associated with jobs in the high-tech industry, such as computer programming, ...

You May Also Like

Hot Definitions
  1. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  2. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  3. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  4. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  5. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
  6. Irrevocable Trust

    A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets ...
Trading Center