Simply put, the banks say that if the borrower of the project company does not have enough money to repay the loan and interest at any time during the term of the loan — say, five to seven years, even during the operating period well after the end of the project — the sponsor must go up and help pay. In fact, if the borrower does not pay, the sponsor must pay. With respect to international project financing, the responsibility of the final sponsor or shareholder and the main shareholder of the project company is limited to providing own financial resources in addition to syndicated banking facilities to ensure that the project is completed in a timely manner. We call it limited recourse funding. One month is allowed, as it usually takes three weeks to register a capital increase at the registry office. A similar schedule is convenient for the sponsor to find ways to finance his own credit facility. The help of sponsors is useful in saving the company from the project if, despite the bank endowment, it cannot afford to pay the construction costs and associated costs. The sky is the limit of the sponsor`s responsibility in this regard. In other words, the banks expect the sponsor to have pockets deep enough for any eventuality. Lenders will generally not wait for the project to collapse. They will monitor the financial health of the project company every three months, especially during the construction period, through audited and audited annual accounts. If they experience a liquidity problem in the next quarter, banks will have enough time to load the sponsor`s personal funds, otherwise lenders will have the right to cut the line of credit. This practical note focuses on the second form of capital assistance – the financial aspects.

That`s the tricky part. Sometimes banks go even further, forgetting that this is only temporary support and not a permanent personal guarantee. They extend the payment documents supported by the promoter beyond the project`s closing date until the date of the full loan repayment. The only objective of promoting sponsorships is therefore the completion of the construction.