Is project finance a suitable option for small start-ups?

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Posted by:
Chamalka Nirupama Alwis Samarasinghe
16-December-2015

Business Ideas Project Finance Small Business Finance Startups

Question ajoutée par Shahbaz Hayder , Group Head of Finance , Sharif Group of Companies
Date de publication: 2015/04/20

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par Nader Mardini , Group Chief Financial Officer , Al Falah Readymix

Unless the start-up has a concession or an off-take agreement that provides a steady and secured stream of revenue and unless the sponsors have a track record in performance or proven-technology, I don't see how it can be a suitable option!

By definition and practice, project finance is used to finance infrastructure and industrial projects with heavy CapEx, and entails long term loans given to an SPV and secured by the cashflows of the project being financed rather than the balance sheet of the sponsors. In other words, the project is ring-fenced and lenders have no recourse to the sponsors.

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