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ARTICLE · 16 APRIL 2023

Top Ten Risk Mitigation Issues In Renewable Energy Construction Loan Agreements

Foley & Lardner LLP
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Construction financing is used to fund the construction of renewable projects prior to such projects obtaining long-term financing. Because construction loans...

United StatesEnergy and Natural Resources
Darin M. Lowder
Darin M. Lowder
Annie Tsai
Annie Tsai
Sunita Paknikar
Sunita Paknikar
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Construction financing is used to fund the construction of renewable projects prior to such projects obtaining long-term financing. Because construction loans are disbursed during a high-risk phase of a project, these loans carry different terms, pricing and conditions than subsequent longer term financing facilities. Negotiating construction loan agreement terms and provisions are therefore crucial in mitigating risk from both a Lender's and a Borrower's perspective. Parties negotiating construction loan agreements typically focus on these ten common areas:

  1. Definitions
  2. Lending Mechanics
  3. Interest
  4. Prepayments
  5. Collateral
  6. Conditions Precedent
  7. Representations and Warranties

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