Public Commentary: This page speaks to project developers, investors and corporate offtakers. It is not legal advice or a financing offer.
Structured Finance — Funding the Carbon Project Life Cycle
How do you bankroll satellite mapping, field crews and seed stock when the first credit won’t show for three years? Most lenders shrug. We don’t. FG Capital Advisors lines up cash that moves with your milestones—seed notes at design, construction loans at planting, receivables-backed paper once credits hit the registry.
Guide Navigation
1. What Is Carbon-Project Structured Finance?
Carbon-credit projects mint future cash-flows long before they mint credits. Structured finance stacks those future sales, land rights and performance contracts into collateral that investors can price today, letting you push ahead without giving away the farm.
2. Typical Structures We Arrange
| Instrument | Borrower | Tenor / Pricing | Advance Rate |
|---|---|---|---|
| Feasibility Seed Note | DevCo or Project SPV | 12–24 mos; SOFR + 8-10 % | Up to 70 % of early spend |
| Development Bridge Loan (Validation & Verification) | Project SPV | 2–4 yrs; SOFR + 6-8 % | Up to 80 % of costs to first issuance |
| Construction & CAPEX Facility | Project SPV | 5–8 yrs; SOFR + 4-6 % | 65-75 % of hard costs |
| Carbon Credit Prepay | Offtaker SPV | 1–5 yrs; fixed or spot-discount | Up to 85 % of expected vintage |
| Post-Issuance Securitization | HoldCo | 3–7 yrs; SOFR + 3-5 % | Up to 90 % of verified credits in escrow |
3. Capital Providers We Work With
- Impact & climate funds: Off-balance-sheet loans and convertibles.
- Commodity traders & corporate offtakers: Pre-payments secured on future vintages.
- Specialty credit funds: Medium-term senior and mezzanine tranches.
- Development finance arms: Concessional slices that crowd in private money.
- Multilateral guarantee schemes: Wraps for political and reversal risk.
4. Our Process
| Phase | Main Tasks | Duration |
|---|---|---|
| Eligibility & Mandate | Land title check, project type, registry path, policy scan | 1 week |
| Baseline & Feasibility | Hire forestry / waste experts, build baseline scenario, cost model | 4 weeks |
| Validation & Term Sheet | Secure VVB slot, push data pack to lenders, price talk | 4 weeks |
| Diligence & Documentation | Independent technical, legal docs, hedging set-up, ESG review | 6-8 weeks |
| Financial Close | Sign facility, stand-up escrow, first draw | 1 week |
5. Risk Controls & Covenants
- Buffer pool escrow: Reversal risk covered by surplus credit lock-up.
- Step-in rights: Lenders can replace operator if monitoring stalls.
- Minimum credit price: Cash sweep if spot drops below floor.
- Re-validation trigger: Fresh audit every five years or at material change.
- Title & insurance: MIGA or PRI overlay where land tenure is fragile.
6. Execution Timeline
From mandate to first draw, most carbon-project financings wrap inside 12-20 weeks, assuming baseline data and host-government permits are in hand.
Next Step
Got acreage that’s registry-ready—or credits stuck on your balance sheet? Drop us a line. FG Capital Advisors will check eligibility, scope the right structure and fire back a term-sheet outline.
This guide is for information only. Always secure independent legal, tax and technical advice before entering any structured financing.
