What is project financing?

Project financing is a form of financing where the primary consideration for lending or investment is the project's cash flow. In project financing, the financial viability of the specific project, rather than the overall creditworthiness of the borrower or lender, is the central focus. Lenders or investors assess the projected income, cash flow, and financial performance of the project to determine whether it can generate sufficient funds to repay the financing and generate a return on investment.