Key steps in financing a project

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Key steps in financing a project
  • Initiating a project—before seeking finance
  • Lenders' perspective on a project—assessment of risks
  • Lenders' perspective on a project—due diligence
  • Overview of key steps in a typical project

Key steps in financing a project

Most projects require some form of debt financing. The debt element of the funding for a project is typically referred to as 'project finance'.

While no two project finance transactions are ever the same, there are certain key steps which are fundamental to securing financing for a project. Those key steps are explained in this Practice Note.

Initiating a project—before seeking finance

The initial steps in the life of a project will depend on whether the project is being publicly procured (ie initiated by a government or other public entity) or privately initiated.

In the UK, public procurement rules require certain 'contracting authorities' such as central government or its agencies to conduct an open and formal competition process to procure bids for the provision of certain goods and services (see Practice Note: Introduction to public contracts procurement).

The main objectives of the rules and regulations which govern public procurement in the European Union are that:

  1. bidders are treated in an equal and non-discriminatory way, and

  2. the bid process is transparent

For information on when potential sponsors must bid to the government (or another public body) through a competitive process to be awarded the right to develop the project, see When the procurement regulations apply.

In the European Union, bids for eligible publicly-procured projects must be conducted according to one of four bid procedures. Most

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