What Is Project Financing?
Project finance is the funding (financing) of long-term infrastructure, industrial projects, and public services using a non-recourse or limited recourse financial structure. The debt and equity used to finance the project are paid back from the cash flow generated by the project.
One of the primary advantages of project financing is that it provides off-balance-sheet funding from the project, which will not affect the shareholders' credit or the government contracting authority and shifts some of the project risks to the lenders in exchange for which the lenders obtain a higher margin. Other examples of project finance include mining, oil and gas, and building and construction. Typically, the financing is made up of debt. Capital stack ranks the priority of different sources of financing. Senior and subordinated debt refer to their rank in a company's capital stack.
We understand that many borrowers/sponsors are experts in their own business area; however, they are unfamiliar with the project finance processes and protocols. Borrowers/sponsors typically need private finance to undertake their project but may not realize the complexities or the level of work involved in securing that finance. That said, poorly prepared projects entering the project finance marketplace, in our experience, stand little or no chance of success. Prospective lenders/funders always favor well-prepared projects that appear to be well-managed and imbue a sense of confidence.
Therefore, we highly recommend that borrowers/sponsors take the time to develop their ideas, concepts, and strategies for the project into a compelling, high-quality, and well-written project business plan that will not only convince us but, eventually, our lenders/funders to provide financing for their projects.
We are interested in global projects that seek development and or acquisition finance in the following industry:
- Infrastructure (e.g., energy; in particular waste to energy, ports, rail, buildings, and telecoms).
Who Are Our Lenders?
Our lenders are alternative capital lenders and not banks. They don't operate like a bank. The project financing lenders that we work with have an unconventional methodology that most typical borrowers are not accustomed to or used to. The lenders we work with have a unique platform where their processes and protocols facilitate their ability to do what they do.
For those who follow their steps, the process is relatively seamless and straightforward, and for those who attempt to customize their steps and alter their protocols to suit their own way of thinking, our lenders are not the right ones for you. The reason is that our lenders are under strict compliance requirements that do not allow them to deviate from the guidelines that they have agreed to and abide by, which also makes the terms and conditions of the loan facility possible.
We have access to the funds you need to get your project funded. We have partnered with the US, UK, Panama, and Canada-based lenders that specialize in project financing. They have funded projects in billions of dollars globally in green and renewable energy, infrastructure, sustainable commercial real estate, commercial real estate development, etc., in the form of loans and equity.
- To learn more about our US-based lending program, please click here!
- To learn more about our Canadian-based lending program, please click here!
- To learn more about our UK-based lending program, please click here!
We will work with projects in US-friendly countries/and/or countries where the US, UK, and Canada do not have international sanctions. For example, our lenders do not lend to countries such as Russia, North Korea, Iran, Syria, etc.).
Funding Dollar Size:
- Our UK-based lender prefers projects with a minimum project loan size of $50 million and up to $5 Billion.
- Our US-based lender only works with projects greater than $100 million and up to $5 Billion.
- Our Canadian-based lender requires a 20% deposit for each project; the minimum deposit is $1 million (USD). However, for the 4-1 Loan Program, the client must have a minimum of USD 12.5M in CASH pledged to your project as the "Initial Deposit."The lender will provide the balance of the 80% required for the project.
We do not charge any upfront fee. However, we charge a success fee of 2% - 3% of the total gross loan amount for arranging the project debt financing loan. We only get paid when our clients successfully receive funding from the lenders we introduced.
Please note that it is customary in the project financing, the project company/borrower will be expected to bear the cost of all due diligence including, but not limited to;
- Professional Reports
- Legal Fees
- Structuring Work
- Valuation Appraisals
- Technical Fees
- Tax Work,
- Legal Fees and reasonable "out-of-pocket" expenses.
These fees are paid directly to the lender as part of the initial costs.
Please note that in the traditional banking market, the project company/sponsor's money that they already spent in preparation for initiating the projects (e.g., land, R&D, acquiring other assets, etc.) may be taken into account by the banks and considered as "equity contribution" or a "deposit" towards the sponsor's funding. But, the borrower will be expected to cover other related costs.
In the world of alternative capital markets, the sponsor preceding financial commitment is an essential encouragement to the lender. However, there are still costs and charges involved in the sponsor financing. The lender is still expecting to see a contribution from the project sponsor. Also, despite the sponsor has already spent thus far, a lender could still turn down the sponsor application if the lender doesn't believe that the management team is not up to the job to complete the projects.
What Do We Need To Review Your Projects?
To consider your project funding, we will need the following preliminary documents to determine whether or not we want to work on your projects. Please view the content herein as a guide in providing us with information for our initial assessment.
For our lenders to consider embracing the financing requirements of a project, they do need to have a detailed understanding of the Net Cash requirements from start to finish, resulting from the use of a development-focused credit facility, and to have a clear view of the repayment/exit timeline and mechanism, whether it is from a combination of revenues, assets sales or refinancing. The lenders also have to understand the pre-project circumstances, the actual players involved, their roles and engagements, and the exact execution requirements to figure out what realistic financing conditions could be. Please be descriptive and explicit when providing such information and cover all valuable aspects.
- Executive Summary
- Detail Business Plan; Please provide a complete description of the business and projects themselves and precise identification of targeted/identified clients-buyers, target markets and locations, conditions, and other factors ensuring revenue outcome and existing/expected arrangements. Suppose no market study, a description covering the existing business and financial conditions in the market are contemplated, identifying related immediate and long-term risks and competition—identification of sub-contractors, engineers, architects, services providers, investors, consultants, etc. In the form of a comprehensive document, please review and gather the necessary information and assemble the figure to get a detailed understanding of the aggregate net cash requirements over the whole timeline leading to final delivery.
- 5-10 Years Financial Projections; A detailed and aggregate cash requirement budget, in Exel format, per period and for the whole timeline from start to delivery (including the planning and pre-implementation period) and leading to refinancing (e.g., through a construction-delivery-sale cycle). They provide a source of funds inflows and cash use/outflows per period (e.g., monthly or quarterly).
- Management Resume/Sponsor(s) Background; After receiving your initial inquiry and the four documents mentioned above, we will review and assess them to determine the project's viability. If the projects are feasible, we will contact you to inform you of the next steps. If not, we will let you know and thank you for considering us for your project's financing.
- Project Development Budget or Construction Budget.
Please note that most of our lenders require the borrower(s), project sponsor(s), or project developer(s) to have skin in the game, which is actual cash equity in the deal. Deals with no equity are entirely too speculative, and on average, deals that get approved by lenders are those with higher-than-average borrower equity.
The project owner(s), the borrower(s), or the project developer(s) needs at least 20% of The Total Project Cost. Our lenders may provide 100% financing under certain conditions, such as equity participation, purchase of shares of the project company, and other requirements. All loans are subject to the funder's eligibility requirements, underwriting guidelines, additional terms and conditions, and approval. Each lender requires specific supporting documentation with each new application.
We do not consider the individual's credit scores; instead, we focus on the projects' merits and viability. We will also consider sponsor(s) background and types of collateral (e.g., Off-take Agreements, SBLC, Bank Guarantee, Land, Real Estate, etc.).
We appreciate your interest in considering us for your project's financing. We look forward to working with you.