Principles of Project Finance

fore be willing to take risks unacceptable to the financial markets. Vendor finance

may thus enable a supplier to increase sales and open up new markets.

Vendor finance may take the form of a loan (i.e., selling the equipment on

credit), a lease of equipment, or even a guarantee of a bank financing. A vendor

just introducing banks to provide finance to the project (without any guarantee) is

not providing vendor finance, which in this context means finance provided at the

vendor’s risk, not the banks’ risk.

It has to be said, however, that finance is sometimes offered by the vendor as

part of a bid to secure a contract, with little understanding of the real risks and

difficulties involved, and time may be wasted by the sponsors pursuing a financ-

ing plan that ...