Financing for a 40kWh Bridge-Use Folding Container Project

What is an equity bridge loan in project finance?

This page discusses theory and practice associated with an equity bridge loan in project finance. The modelling of a bridge loan is not difficult. With and equity bridge loan, a lender allows the sponsor of the project to borrow the amount of equity invested in the project. The loan can be paid at commercial operation or even later.

How to model a bridge loan?

The modelling of a bridge loan is not difficult. With and equity bridge loan, a lender allows the sponsor of the project to borrow the amount of equity invested in the project. The loan can be paid at commercial operation or even later. The loan has capitalized interest that accumulates until the loan is paid.

How is construction financed?

Construction is funded by sponsor equity and a construction loan. Once constructed, the sponsor sells the project to the investors that have formed a trust and immediately leases it back. The develpoper repays the construction loan from the sale proceeds. The trust is financed with cash equity and a non-recourse term debt.

How does a project get funded?

Most of the funding comes from loans, which are repaid mainly from the cashflows the project generates. This method is often used for large projects that need a lot of money upfront. The project’s risks are shared among the stakeholders, usually through a special purpose vehicle (SPV), a separate company created just for this project.