What lenders examine before financing an infrastructure project

1. Define the project and its right to proceed

Start with a concise project description: location, capacity, technology, development stage, sponsor entities, delivery timetable and proposed financing need. Put the underlying rights beside the narrative. Depending on the project, these may include land tenure, concessions, permits, environmental approvals, grid or transport access, and the contracts that grant construction or operating rights. Identify which rights are final, conditional, pending or held by another party.

A lender or development partner needs to distinguish an attractive concept from an executable project. An unsigned concession, unresolved land access or a permit held by the wrong entity can change both the structure and the timetable.

2. Show where repayment comes from

Present a financial model that ties capital expenditure, construction drawdowns, operating costs and revenue assumptions to a credible repayment path. Separate contracted revenues from projections. State the currency of costs, revenue and debt, and test what happens if completion is late, output falls or prices move. Explain the sponsor contribution and any proposed security; avoid presenting indicative funding as committed capital.

For a project with an offtaker or public purchaser, show the counterparty’s obligation and the route by which cash reaches the borrowing entity. Payment terms, termination rights and enforceability matter as much as the headline tariff or purchase price.

3. Allocate construction and operating risk

Identify who designs and builds the asset, who supplies critical equipment, who operates it, and who bears delay, performance and cost-overrun risk. Review the status of EPC, supply, operation and maintenance, insurance and offtake arrangements. A term sheet cannot repair contradictions between these agreements.

Where equipment or EPC capacity is sourced across borders, document warranties, testing, acceptance, shipping, customs, currency exposure and dispute procedures. Set out the dependencies between completion milestones and financing drawdowns.

4. Verify the parties and their authority

Map the sponsor group, beneficial ownership and each material counterparty. Check corporate standing, signatory authority, relevant experience, sanctions or adverse-information indicators and the provenance of any claimed banking relationship. For multi-party transactions, record who can make commitments and who is merely introducing an opportunity.

Claims of a bank instrument, investor commitment or government support require direct verification through appropriate channels. A circulated PDF, informal email or draft SWIFT text is not proof of issuance or funding. AAL’s counterparty due diligence service describes the scope of an independent review.

5. Present a controlled decision package

A useful initial package contains an executive summary, project and ownership chart, document register, permit status, material contracts, model and assumptions, sources-and-uses schedule, key risks with owners and proposed mitigations, and a timeline of open decisions. Label drafts and unverified claims. Maintain a version-controlled data room and disclose material gaps rather than burying them.

Before approaching a lender, ask: which facts can be evidenced today, which depend on a third-party decision, and which risks cannot yet be priced? The answers determine whether to seek indicative feedback, resolve conditions first or redesign the proposed structure.

When to seek an independent review

A review is useful when the project has genuine commercial potential but its contracts, financing assumptions and counterparties have developed on separate tracks. AAL can assess the structure, sequence and documentation gaps before the sponsor commits to a particular financing route. See structured finance advisory or request a confidential mandate review.

Scope note: Requirements vary by lender, jurisdiction, sector and financing structure. This guide is general commercial information and does not constitute legal, tax, investment or lending advice or a representation that financing will be available.