Renewable energy projects like solar farm development or wind projects can be extremely expensive. From machinery to operations, everything takes in significant capital investment, but it comes with promising returns. If you are looking forward to a renewable energy project, then there are two major financing options: project finance and corporate finance. It is important for individuals and businesses to map the pros and cons before opting for either one of these. Commercial Finance USA comes as a trusted partner for businesses looking for renewable energy project financing.
Project Finance
Project finance is a way to secure finances to fund large or long-term projects. The companies create a separate entity for the project, and the new company is called a Special Purpose Vehicle (SPV). The funds or profit made from selling energy would be used to repay the loans, and the parent company would have no direct involvement with loan repayments for monetary losses. The clear implementation and monetary structure allow multiple stakeholders and help gain potential investors. The real problem is project management and cash flow maintenance, as it comes with legal constraints and could be tedious and time-consuming to set up an SPV. Additionally, renewable energy projects involve a lot of people and paperwork, adding up to overall expenses.
Corporate Finance
Corporate finance means using your company’s existing financial resources and credit to fund the renewable energy project. You don’t need to create a separate company; you can use your existing business assets to secure funding and can use the funds based on your company’s needs. Whereas it can cause long-term problems if the project fails, the entire company has to face financial repercussions, which can impact the company’s stability and credit score.
Conclusion
Businesses should be mindful while making funding choices because if you are a small business looking for investors without compromising the stability of your company, then project financing can be the choice for you, whereas if you are a stable corporation with a high credit score and strong financial background, corporate funding can be the best choice for you. Commercial Finance USA offers custom financing solutions based on your project needs. From infrastructure funding to operations, we can help you with all your financial needs. We offer non-real estate loans at competitive interest rates. Get in touch with us for personalized assistance.
