Private Project Financing Picks Up Where the Banks Leave Off

Since the banks have left many Project Financing options hanging, there are other options that have come available to companies looking for larger ticket financing.

There are finance groups out there that are interested in your venture and offer Project Financing. In general the sweet spot is $25 million and over, but if you have projects that are $5 million and over, there are sources.

Where does the money come from? Generally Private Corporations that manage hedge funds and the like that have found an opportunity that has been left by the banks since many banks are not funding these types of deals anymore.

The fees and rates to get private money like this will typically range from 7% to 10% interest, which is comparable to what the banks were charging when they were doing Project Financing.

What do they fund? In reality, any type of project that makes sense. Real Estate Developments, Alternative Fuel Projects, Acquisitions, Import/Export anything like this.

Requirements. In order to apply for Project Funding you need to have a well crafted Executive Summary to start. You need to demonstrate that you have the capability to see the project through. The Executive Summary must be both your resume as well as the analysis of the project to show how you will do it, step by step and also an exit strategy to show if things do not work out, how the lender funds will be secured.

If you have everything done ahead of time and all your information is complete then you can expect to close in as little as 45 days. After you have accepted the terms of the financing then the file goes to an exhaustive underwriting process to make sure everything is set up properly and the risks are minimized.

What do we mean by a vested interest? The Project Financing lenders must make sure that if things get difficult in the project, you are not going to walk away from it. This is done by you, the applicant having a significant financial interest in the project.

Vested interest in the project may come in the form of funds being held in escrow, down payment, equity, hold other valuables as collateral, this varies project by project.

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