Project Finance vs. Corporate Finance
When to fund an industrial asset off the sponsor's balance sheet versus inside a ring-fenced SPV — the practical trade-offs on cost, tenor, control and speed.
The core differences at a glance
- Recourse — corporate: full recourse to sponsor; project finance: limited or non-recourse to sponsor.
- Security — corporate: general corporate covenants; project finance: full project security package (share pledge, assignment of contracts, accounts, insurance).
- Tenor — corporate: 3–7 years typical; project finance: 10–20 years.
- Pricing — corporate: cheaper 100–250 bps; project finance: higher due to structuring and monitoring.
- Speed — corporate: 6–12 weeks; project finance: 6–14 months.
- Sponsor return — corporate: dampened by debt on parent; project finance: leveraged, ring-fenced IRR.
When project finance wins
Choose project finance when capex is large relative to sponsor balance sheet, when the project has a defined revenue stream (offtake, feed-in tariff, long-term contract), when non-recourse is strategically valuable (joint ventures, sovereign risk isolation), or when DFI / ECA participation is on the table — those funders almost always require SPV structures.
When corporate finance wins
Choose corporate finance when the asset is embedded in an existing operation, when speed to close matters more than tenor, when the sponsor has strong unused debt capacity, or when the ticket is below USD 15–25M and project finance structuring costs would eat the pricing advantage.
Frequently asked questions
Can we start corporate and refinance into project finance later?+
Yes — 'take-out project finance' is a well-worn path: sponsor funds construction from the balance sheet, then refinances the SPV once operations stabilise (usually 12–24 months post-COD).
Do DFIs ever do corporate loans?+
Yes — but rarely for greenfield projects. DFIs prefer project finance for greenfield capex because it ring-fences E&S monitoring and cash flows.
Is project finance always non-recourse?+
In practice, most is limited-recourse: sponsors provide equity, completion guarantees during construction, and sometimes debt service undertakings — with recourse falling away once the project passes lender-defined completion tests.
Share a two-line brief and we'll return with the sourcing, structuring and financing route best suited to your capex, geography and timeline — buyer-first, vendor-neutral.