Definition and Types of Project Finance

Project finance means the financing of long term industrial projects, infrastructure and public services with the help of a proper financial structure. In other words, the financial investments required in the resources and in processes of business during the whole time of any project can be said to be as project finance. According to Gatti (2012), it is a loan structure for any project that can meet the expenses of resources, infrastructure and others. Project finance also assists in the analysis of long term economic outcome of any project, considering the fact that financial infrastructure of any project depends on the combination of debt and equity that are paid back from the cash flow. The financing can be done by several sources, including investors, sponsors, governments, sleeping partners, angel investors, suppliers and so on.

There are mainly two types of project finances, which include debt and equity financing. Debt financing for any project means the amount of money that is obtained for financial help from the investors, sponsors, private financial institutions, banks and so on. While, on the other side the equity financing can be defined as the increase in the equity of the owner or stockholder of a particular company in order to acquire an asset. As mentioned by Gorton and Souleles (2007), these tools help companies to avoid any risk aspects by enhancing its capability to sustain in the competitive market. Based on these two types of financing, a robust business case can be properly executed.

Author Bio:This Article is Written by Mark Edmonds,is an Academic Writter at Academic Assignments.

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