Project Finance Basics for Indian Entrepreneurs

Project Finance

By CreditLink Advisors · 09 Feb 2026 · 8 min read

Project finance funds a specific project — such as setting up a new manufacturing unit or infrastructure asset — based largely on the project's own projected cash flows rather than the general creditworthiness of the promoter alone.

A few concepts recur across most project finance discussions: Project Cost (the total capital required to set up the project), Promoter Contribution (the portion the promoter funds from their own resources, often called margin money), and the Debt Requirement (the balance to be financed by lenders).

Lenders also focus heavily on the Debt Service Coverage Ratio (DSCR) — broadly, a measure of whether projected cash flows are sufficient to service debt repayments — and the Debt-Equity Ratio, which indicates how leveraged the project is.

A credible, well-documented project report with realistic revenue and cost assumptions, a clear implementation timeline, and an appropriate security structure materially improves a lender's ability to evaluate the proposal. {{VERIFY}} Specific ratio thresholds and appraisal norms vary by lender and project type.

Disclaimer: This article is for general information only and does not constitute financial, investment or legal advice. Loan terms, eligibility and processes vary by lender and change over time — please verify current details with the relevant bank/NBFC or a CreditLink Advisors representative before acting.

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