Project Finance#
What is Project Finance?#
Long-term financing for large infrastructure and industrial projects based on projected cash flows.
Types of Project Finance#
1. Term Loans
- Long-term loans (3-10 years
- For capital expenditure
- Secured by assets
2. Working Capital Finance
- For day-to-day operations
- Cash credit, overdraft
- Working capital limits
3. Infrastructure Finance
- roads, power, ports
- Special financing schemes
- Long tenure
Project Appraisal#
Technical Appraisal
- Project feasibility
- Technology selection
- Capacity assessment
Financial Appraisal
- Project cost estimation
- Cash flow projections
- IRR calculation
- Debt service coverage
Economic Appraisal
- Cost-benefit analysis
- Social impact
- Economic viability
Key Metrics#
| Metric | Formula |
|---|---|
| DSCR | NOI / Debt Service |
| IRR | Rate where NPV = 0 |
| NPV | PV of cash flows - Investment |
Lenders Perspective#
- Project viability
- Cash flow sufficiency
- Security and guarantees
- Promoter contribution
- Risk mitigation
Documentation#
- Project report
- Feasibility study
- Technical appraisal
- Financial projections
- Security documents