Concept-Stage Project Finance to Bankable Term Sheet
Lenders do not fund ideas. They fund contracts, cash flow, and control. If you are sitting at early concept with a model and a slide deck, this playbook shows the shortest path to a bankable term sheet that a credit committee can sign off.
Outcome:
a lender-ready file with proof of revenue, construction and operating risk boxed in, sensible sponsor equity, and a clean security and insurance stack.
What “Bankable at Term Sheet” Means
Cash flow is visible
Signed or near-final offtake or availability payments, or a contracted revenue framework with pricing formula and tenors that match debt.
Build risk is boxed
Fixed-price EPC or a clear multi-contract strategy with performance bonds, LDs, and a defined completion test.
Sponsor equity is real
Cash equity committed and timed. Soft commitments do not count. In-kind contributions need third-party validation.
Control is enforceable
Security over shares, accounts, key contracts, and assets. DSRA rules agreed. Step-in rights defined.
Minimum Evidence Lenders Expect
| Workstream |
Evidence at term sheet |
Why it matters |
| Commercial |
Signed HoA or near-final offtake/PPA/tolling, credit of counterparty, price formula, volume, take-or-pay or availability terms |
Revenue certainty and counterparty risk |
| Technical |
Concept FEED or equivalent, vendor quotes, site studies, grid or interconnection status, O&M concept and KPIs |
Buildability and performance risk |
| Construction |
EPC shortlist with term sheet, LDs, performance bonds, completion criteria, long-lead items plan |
Cost and schedule control |
| Permits & ESG |
Permitting roadmap, baseline ESIA scoping, community plan, key approvals status by authority |
Legal viability and stakeholder risk |
| Financial model |
Integrated 20-30 year model, audit trail, scenarios and sensitivities, tax and VAT logic, funding flows, covenant tests (DSCR, LLCR) |
Debt sizing and covenant headroom |
| Sponsor |
Equity commitment letter, source of funds, track record, governance plan, conflicts disclosure |
Skin in the game and execution history |
Sponsor Equity: How Much and From Where
| Project type |
Typical equity share at FID |
Acceptable sources |
| Contracted infrastructure and power |
25–35% |
Sponsor cash, co-invest, development fee reinvest, partial vendor deferrals with caps |
| Commodity processing and logistics |
30–40% |
Sponsor cash, offtaker equity, strategic JV, project-level preferred equity |
| Early mining or resource projects |
35–50% until reserves and offtake harden |
Sponsor cash, streaming or royalty, strategic offtaker stake |
Security Package and Control
| Element |
What lenders look for |
| Share pledge |
Pledge over the project SPV and holding entities with voting and transfer restrictions |
| Accounts control |
Controlled collection and disbursement accounts, clear waterfall, DSRA sized to 6–12 months debt service |
| Contract assignments |
Step-in rights and assignment of offtake, EPC, O&M, permits, land, and key supply contracts |
| Asset security |
Fixed and floating charges over project assets where registrable |
| Completion support |
LDs, bonds, parent support where needed, and a tight completion test before term-out |
Insurance and Risk Transfer
During construction
CAR or EAR policies, delay-in-start-up with realistic indemnity period, contractor third-party liability, marine cargo for long-leads.
During operations
Property damage and business interruption, O&M liability, environmental, and where relevant, political risk or PRI for frontier markets.
Data Room Checklist That Moves Credit
| Folder |
Must-have files |
| Commercial |
HoA or draft PPA/offtake, counterparty financials, demand study |
| Technical |
Site studies, FEED or concept design, equipment quotes, interconnection letters |
| Permits & ESG |
Permitting matrix, ESIA scope, community engagement plan |
| Financial model |
Excel with inputs tab, scenarios, covenant tests, audit trail, sources and uses |
| Legal |
SPV structure chart, shareholder agreements, land or lease documents |
| Sponsor |
Equity commitment letter, proof of funds, track record and references |
How Lenders Size the Deal
DSCR
Minimum 1.20x–1.35x depending on sector and volatility. Higher for merchant exposure.
LLCR
Loan life coverage must clear bank hurdle based on P50 and P90 cases.
Debt tenor
Tenor set inside contract life with a buffer and a realistic tail to maturity.
Timeline and Decision Gates
Gate 1
Concept pack ready. Model v1, site and permits map, draft offtake terms, EPC shortlist.
Gate 2
Indicative lender outreach. Receive appetite notes and redlines on structure.
Gate 3
Credit pack complete. Offtake and EPC terms aligned. Model P50/P90 cases locked.
Gate 4
Term sheet negotiation. Security, covenants, pricing, and conditions precedent agreed.
Gate 5
Confirmatory diligence and signing. DD scopes launched. CP checklist issued.
Why Files Stall and How to Avoid It
- Offtake letters that read like marketing. Fix: move to HoA with price formula, volume, term, and credit of buyer.
- Loose EPC terms with no LDs or bond support. Fix: tighten completion test and securities before outreach.
- Equity “intent” without cash proof. Fix: real equity letters and bankable sources, timed against CPs.
- Models with hidden assumptions. Fix: audit trail, input sheet, and scenarios that match bank cases.
- No clear permit path. Fix: matrix the permits with owners, dates, and risks, then keep it updated weekly.
What We Deliver
| Deliverable |
Contents |
Outcome |
| Credit pack |
Bank memo, model with cases, permits matrix, EPC and offtake term sheets |
Single source of truth for lender review |
| Structure and security map |
Waterfall, DSRA rules, security list, step-in and completion criteria |
Control and protection defined upfront |
| Insurance term sheet |
CAR/EAR, DSU periods, O&M covers, PRI if needed |
Risk transfer documented for credit |
| CP checklist and timeline |
Conditions precedent tracker, owners, dates, and evidence list |
Clear path from term sheet to close |
Ready to Reach Term Sheet
Send your model, draft offtake, EPC status, permits map, and equity plan. We will return a structure memo, lender shortlist, and a calendar to get you over the line.
Start the Process
Guidance reflects common market practice. Any financing is subject to independent credit approval, KYC and AML checks, sanctions screening, third-party due diligence, and executed documentation. Terms vary by sector, jurisdiction, and counterparties.