Project financing is a medium to long-term loan issued for a specific project, and the borrower needs to establish a separate company to bear the loan for the project. In the future, the company's cash flow and income will be used as repayment sources, and its assets will be used as loan guarantees.

Project financing is mainly divided into two types

Non recourse project financing

Non recourse project financing, also known as pure project financing, relies entirely on the operational efficiency of the project for future repayment of principal and interest. At the same time, in order to protect their own interests, the borrower will obtain property rights as collateral from the project assets. If the project fails to be completed or operates, and its assets or income are insufficient to repay the full loan, the lender has no right to claim compensation from the borrower of the project.

Project financing with recourse

In addition to using the operating income of the loan project as a repayment source and obtaining property rights as collateral, the borrower may also request third-party guarantees. When the borrower is unable to repay the loan at the due date in the future, the lender has the right to claim from the guarantor.