Working Capital for Industrial Equipment & Infrastructure Projects
How buyers and EPC contractors fund the cash gap between supplier payments and project cashflows — advance payment bonds, supply chain finance and pre-shipment lines.
Even a fully financed project has a cash-gap problem: down payments to suppliers, imported components, construction milestones and operating ramp-up all happen months before the asset earns revenue. Working capital finance bridges that gap.
Advance payment guarantees (APGs). Issued by the supplier's bank to the buyer, refunding the down payment if the supplier fails to deliver. Standard on any cross-border equipment order above ~USD 500K.
Performance bonds. Usually 10% of contract value, held until acceptance testing is complete. Priced at 0.5–1.5% per annum depending on the supplier's credit.
Pre-shipment / packing credit. A short-term line to the supplier to fund raw materials and manufacturing before shipment, repaid from the buyer's payment or ECA-backed loan on delivery.
Supply chain finance (reverse factoring). The buyer's bank pays approved supplier invoices early at the buyer's credit rating; the supplier gets cash on issuance, the buyer keeps the original payment terms.
Import loans / trust receipts. A revolving line for the buyer against imported equipment and components, typically 90–180 days, repaid as the project reaches milestones.
Commissioning working capital. Often overlooked — feed, chicks, fingerlings, seeds, seasonal inventory, energy and payroll during the ramp-up months. Include this line in the base-case model from the start; adding it post-close is painful.
Frequently asked
Some initial working capital (usually the first 3–6 months) can be sized into the senior facility. Ongoing working capital is normally a separate revolving line, sometimes from the same lender.