A project loan is a type of loan specifically designed to finance a particular project, like building a new factory, launching a new product, or developing real estate. Here’s how it works in simple terms:

1. Purpose: The loan is used to fund a specific project or initiative, such as construction, expansion, or other large-scale investments.

2. Loan Amount: You can borrow a significant amount, depending on the project’s size and requirements.

3. Repayment: Repayment terms vary based on the project’s cash flow and timeline. You might start paying back after the project is completed or as it generates revenue.

4. Interest Rate: The interest rate can be fixed or variable and is usually based on the project’s risk and duration.

5. Collateral: Depending on the lender and the project, you may need to provide collateral or personal guarantees.

6. Use: It’s commonly used by businesses or organizations that need funding for specific capital expenditures.

In summary, a project loan helps fund specific initiatives, with terms tailored to the project’s needs and expected revenue.