Project Finance FAQ is an extensive library of frequently asked project finance questions and answers that features several hundred thoroughly answered project finance questions. Because project finance is the most complex financing structure in the world of international finance, Global Trade FServices furnishes this expansive Project Finance FAQ to help project sponsors and project stakeholders who are here to apply for project financing self-analyze the viability of their project and intended financing.
We also provide this material to better help you generally understand project finance. Our objective is to provide you with a project finance FAQ platform that presents answers to many of the most often asked questions about project finance features, project finance procedures and project finance documents to assist project sponsors and project stakeholders with the project finance request.
The project finance FAQ is extensive, thorough, and exceedingly useful to Project Sponsors, equity investors, project contractors and consultants, and project participants of every kind when used thoroughly. If you are applying for project financing please resist the urge to skim the highlights.
Becoming familiar with the answers to these project finance FAQ questions increases the likelihood that your Project Finance Application will be approved and may also reduce potential delays in the financing process. Sponsors may also find the industry resources page of the International Project Finance Association helpful.
Yes. We require actual cash equity in the deal. All project finance lenders, project finance arrangers and project finance providers require the borrower to have equity in the deal. We have never funded a project financing with less than 10% equity, and then only once in the last decade. The average project financing last year closed with 63% debt and 37% sponsor equity.
Project finance is not speculation. It was developed more than 700 years ago as a method of financing that is specifically intended to mitigate or eliminate risk. In fact, almost every element and procedure in project finance are for risk mitigation. For every project finance transaction closed there are more than 20 applications because project finance lenders are extremely careful about taking risk. Deals with no equity don’t get funded and deals with very little equity stand very little chance. For additional information see
Project Finance Risk
Project Finance Procedures
We perform enhanced due diligence on all project stakeholders with an emphasis on project sponsors. The due diligence investigations are mandatory and project finance underwriting cannot be completed until all of the due diligence has been implemented. We have a form for project sponsors which is furnished at the start of underwriting. Due diligence investigations are performed by a third party service with whom we have an agreement for discounted investigative fees and you are only responsible for the actual fee.
We break project finance due diligence into two distinct packages. The preliminary due diligence investigation is performed more or less coincidentally with the site visit. The final, comprehensive due diligence is performed after you get preliminary approval.
The borrower pays for both investigations, the site visit costs for two of our senior managing partners, and all expenses.
Before we submit a project finance loan request or documents to our financial partners, we perform a preliminary due diligence investigation. While not the final, comprehensive due diligence that will be required if the deal continues forward, the preliminary due diligence investigation is intended to uncover any sponsor or project deficiencies that would hinder the closing of the project financing.
We will verify the Sponsor’s reputation, financial strength, and relevant experience. We will verify the quality and sufficiency of the project documents (at least those that have been prepared to date), and we will analyze the project and property in tandem with our site visit. Our Preliminary Due Diligence Report will be prepared after the site visit and provided to the lenders.
The cost of developing project documentation varies widely depending on the scale, nature, and complexity of the project. It is a significant expense but is necessary to secure financing and likely improves the profitability of the project.
At Global Trade Funding Services we can create the project finance documentation for your project. Having us develop the project documents significantly increases the likelihood of securing approval for the project financing because we can control the quality of the documents and we can craft the documents precisely the way lenders prefer them.
Our high-performance project finance team that produces comprehensive market studies, financial feasibility studies, business plans, architectural plans, environmental surveys and all of the project documentation you need. We develop the project documentation for most of the projects we approve for financing.
We form a syndicate comprising a number of professional international investors and lenders. From the investors’ viewpoint, the advantage of being a member of a syndicate rather than the sole investor is that it spreads the risk for the project and each investor can see that other investors have independently concluded that the project is viable and profitable.
Global Trade Services provides international project finance, trade finance and monetization services in more than 100 countries worldwide. Whether you need financing once or many times every month, our financing and advisory expertise are unparalleled, as is our inexorable commitment to your success.
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