Lending against a single ring-fenced asset, or against the business as a whole — and when each fits.
Project finance funds a specific asset through a ring-fenced project company, with lenders relying chiefly on the project’s own cash flows and security. Corporate finance lends against the strength of the whole business and its balance sheet. Sponsors typically choose project finance for large, long-dated assets and corporate facilities for general funding needs.
| Factor | Project finance | Corporate finance |
|---|---|---|
| Repayment source | The project’s own cash flows | The cash flows of the wider business |
| Recourse | Limited or non-recourse to the sponsor | Full recourse to the borrowing group |
| Borrowing entity | Ring-fenced project company (SPV) | Operating or holding company |
| Security | Project assets, accounts and contracts | Group assets, guarantees and pledges |
| Documentation | Heavier and project-specific | More standardised |
| Typical use | Real estate development, infrastructure, energy | Working capital, growth, acquisitions, refinancing |
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Weigh recourse against cost and complexity: ring-fencing protects the group but demands heavier structuring, diligence and security, while corporate facilities are simpler but put the whole balance sheet behind the debt. Many groups combine both — funding developments through project finance while running corporate lines for general needs — and the split is a core part of designing the capital stack. Debt tickets across both routes typically run USD 10m–500m+.
Project finance ring-fences a specific asset in its own company, with lenders relying primarily on that project’s cash flows and security. Corporate finance lends to the business as a whole, against its balance sheet, earnings and the strength of the wider group.
Not always. Many facilities are limited-recourse in practice: sponsors may give completion support, cost-overrun undertakings or partial guarantees. The degree of recourse is negotiated case by case and is reflected in pricing, security and covenants.
Yes. A group may fund a development through a ring-fenced project company while using corporate facilities for working capital and general needs. Deciding which assets and cash flows sit where is a central part of capital structuring.
Corporate facilities are usually quicker: documentation is more standardised and lenders underwrite an established balance sheet. Project finance involves heavier, project-specific documentation, ring-fenced accounts and security over contracts, so structuring and diligence take longer. Preparation quality drives the timetable in both cases.
Security over the project itself: typically a mortgage or charge over the asset, security over project accounts, and assignment of key contracts such as construction and sales agreements. Lenders rely on this package precisely because recourse to the wider sponsor group is limited.
Debt tickets across both routes typically run USD 10m–500m+. The choice is driven less by size than by recourse and ring-fencing: large, long-dated single assets suit project finance, while general corporate needs at almost any scale can sit within corporate facilities.
Speak to a partner about how this applies to your transaction. A partner responds personally, typically within one business day.
