Limited-Recourse Loan

In a project financed structure, the Sponsors will not normally be under any obligation to provide further financing support to the SPV once they have injected their base Equity. The Lenders are therefore said to have limited recourse to the balance sheets of the Sponsors. In practice it is common for some additional support to be provided or for risks to be accepted by the Sponsors, but the latter will wish any support to be limited / capped and for any risks which they accept to be well understood and defined (e.g. the Sponsors might agree to fund construction cost overruns but only up to a total of $10 million).