FINANCING

financing,n.1. The act or process of raising or providing funds. 2. Funds that are raised or

provided. — finance,vb.

asset-based financing.A method of lending in which lenders and investors look primarily to

the cash flow from a particular asset for repayment.

construction financing.See interim financing.

debt financing.The raising of funds by issuing bonds or notes or by borrowing from a

financial institution.

equity financing. 1. The raising of funds by issuing capital securities (shares in the business)

rather than making loans or selling bonds. 2. The capital so raised.

floor-plan financing.A loan that is secured by merchandise and paid off as the goods are sold.

• Usu. such a loan is given by a manufacturer to a retailer or other dealer (as a car dealer). — Also

termed floor planning. Cf. FIELD WAREHOUSING.

gap financing.Interim financing used to fund the difference between a current loan and a loan

to be received in the future, esp. between two long-term loans. See bridge loan under LOAN.

interim financing.A short-term loan secured to cover certain major expenditures, such as

construction costs, until permanent financing is obtained. — Also termed construction financing.

internal financing.A funding method using funds generated through the company’s operations

rather than from stock issues or bank loans.

link financing.The obtaining of credit by depositing funds in another’s bank account to aid the

other in obtaining a loan.

outside financing.The raising of funds by selling stocks (equity financing) or bonds (debt

financing).

permanent financing.A long-term loan obtained to repay an interim loan, such as a mortgage

loan that is used to repay a construction loan.

project financing.A method of funding in which the lender looks primarily to the money

generated by a single project as security for the loan. • This type of financing is usu. used for large,

complex, and expensive single-purpose projects such as power plants, chemical-processing plants,

mines, and toll roads. The lender is usu. paid solely or primarily from the money generated by the

contracts for the facility’s output (sometimes paid by customers directly into an account

maintained by the lender), such as the electricity sold by a power plant. The lender usu. requires

the facility to be developed and owned by a special-purpose entity (sometimes called a

bankruptcy-remote entity), which can be a corporation, limited partnership, or other legal entity,

that is permitted to perform no function other than developing, owning, and operating the facility.

See SINGLE-PURPOSE PROJECT; SPECIAL-PURPOSE ENTITY; BANKRUPTCY-REMOTE

ENTITYY.[Blacks Law 8th]