• This type of financing is usu. used for large, complex, and expensive single-purpose projects such as power plants, chemical-processing plants, mines, and toll roads. The lender is usu. paid solely or primarily from the money generated by the contracts for the facility’s output (sometimes paid by customers directly into an account maintained by the lender), such as the electricity sold by a power plant. The lender usu. requires the facility to be developed and owned by a special-purpose entity (sometimes called a bankruptcy-remote entity), which can be a corporation, limited partnership, or other legal entity, that is permitted to perform no function other than developing, owning, and operating the facility. See SINGLE-PURPOSE PROJECT; SPECIAL-PURPOSE ENTITY; BANKRUPTCY-REMOTE ENTITYY.
project financing
A method of funding in which the lender looks primarily to the money generated by a single project as security for the loan.
