Project Finance

Defined by the International Project Finance Association (IPFA) as the following:

The financing of long-term infrastructure, industrial projects and public services based upon a non-recourse or limited recourse financial structure where project debt and equity used to finance the project are paid back from the cashflow generated by the project.

Investopedia Commentary

In other words, project financing is a loan structure that relies primarily on the project's cash flow for repayment, with the project's assets, rights, and interests held as secondary security or collateral.

Project finance is especially attractive to the private sector because they can fund major projects off balance sheet.

Related Links

Off-Balance-Sheet Entities: The Good, The Bad And The Ugly

See also: Cash Flow, Infrastructure, Non-recourse Debt, Non-recourse Finance, Off Balance Sheet Financing, SPV