Project finance is the long-term
financing of
infrastructure and industrial projects based upon the projected cash flows of the project rather than the balance sheets of its sponsors. Usually, a project financing structure involves a number of
equity investors, known as 'sponsors', as well as a 'syndicate' of
banks or other lending institutions that provide
loans to the operation. They are most commonly
non-recourse loans, which are
secured by the project assets and paid entirely from project cash flow, rather than from the general assets or creditworthiness of the project sponsors, a decision in part supported by
financial modeling. The financing is typically secured by all of the project assets, including the revenue-producing contracts. Project lenders are given a
lien on all of these assets and are able to assume control of a project if the project company has difficulties complying with the loan terms.