Securing Non-Recourse Project Finance Loans
Securing Non-Recourse Project Finance Loans
Core Principles of Non-Recourse Financing
In non-recourse structures, the lender’s recovery is limited to the project itself. The sponsor’s broader balance sheet remains ring-fenced. For this reason, every aspect of the deal—revenues, contracts, risks, and governance—must be engineered to protect lenders against loss.
| Element | Purpose | Requirement |
|---|---|---|
| Cash Flow Certainty | Debt service depends solely on project income | Long-term offtake or concession contracts with predictable revenue |
| Security Package | Defines what lenders can seize or control | Pledge of shares, assets, contracts, accounts, and step-in rights |
| Equity Commitment | Signals sponsor confidence and alignment | 20-40% of total project cost as equity or subordinated capital |
| Risk Allocation | Transfers controllable risks away from lenders | Insurance, EPC warranties, hedging, force majeure clauses |
| Legal and Regulatory Certainty | Guarantees enforceability and compliance | Clear title, permits, and compliance with local law |
Steps to Secure Non-Recourse Project Debt
- Develop a credible financial model. Lenders test downside cases and DSCR ratios before engagement.
- Secure long-term revenue contracts. Offtake, concession, or PPA agreements underpin bankability.
- Assemble the security package. Pledge assets, shares, contracts, insurances, and cash flow controls.
- Raise sponsor equity or subordinated capital. Demonstrates confidence and absorbs early-stage risk.
- Engage lenders and institutional funds. Submit a detailed information memorandum with diligence reports.
- Undergo due diligence. Technical, legal, and environmental assessments confirm feasibility.
- Negotiate the debt term sheet. Agree on pricing, covenants, reserve accounts, and cure periods.
- Close and monitor performance. Maintain compliance reporting, reserves, and covenant tests.
Common Challenges in Non-Recourse Financing
- Insufficient contractual certainty or incomplete permits
- Weak equity base or unproven sponsor record
- Inconsistent project documentation or incomplete risk allocation
- Revenue assumptions not validated by independent studies
- Limited lender appetite for unhedged commodity or currency exposure
Best Practices for Bankability
- Secure off-take contracts before seeking financing.
- Commission independent engineering and market reports.
- Ensure environmental and permitting compliance is complete.
- Structure clear step-in rights and waterfall priorities.
- Maintain transparency in sponsor financials and project controls.
Arrange Non-Recourse Project Finance
Financely structures and places non-recourse project loans with private credit funds, banks, and institutional investors. Submit your project to receive structure options, indicative pricing, and a timeline.
Request Project Finance SupportFinancely acts as an arranger and advisor on a best-efforts basis through regulated partners. All transactions are subject to due diligence, compliance review, and lender approval. Nothing here constitutes an offer to lend or a guarantee of funding.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
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Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
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Disclaimer: Financely provides financing based on due diligence and feasibility. Approval is not guaranteed, and past performance does not predict future outcomes. All terms are subject to review. Financely primarily assists with structuring and distribution. Qualified parties carry out the project if the client approves the proposal.
