Project finance is often used to support initiatives, and the correct amount of funding can mean the difference between a project's successes and failures.
Large investment funding scheme
Project Financing is appropriate for large-scale financial transactions and loans.
By lending, some of the project's risks are shifted toward the lender. Therefore the sponsors approved this financing strategy to alleviate some of the risks.
As it typically involves a big project, many parties may be appointed to monitor its various components.
When a project is finished, possession of the project is transferred to the entity specified in the contract.
As per the agreement, the project's excess cash flow would be utilized to pay down the borrower's debt.
Better tax treatment would benefit the project or other sponsors when Project Financing is adopted.