Financing your company or project with an SPV
SPV financing (Special Purpose Vehicle), also called a project company, is a technique widely used to finance large investments (real estate, energy, industry, infrastructure). Its main advantage: enabling high leverage through debt, while isolating the project's risks and flows. In this guide, discover how an SPV works, its advantages, its costs and its concrete use cases.
What is an SPV (Special Purpose Vehicle)?
An SPV (Special Purpose Vehicle) is a company created specifically to carry a given project or asset. In France, it is often a dedicated SAS, whose corporate purpose is limited to the financed project.
👉 In French, it is generally referred to as a société de projet (project company).
The financier (bank, fund, investors) finances the project via the SPV, and not the operating company as a whole.
Why finance a project via an SPV?
Isolate risks and guarantees
The SPV forms a financial "blank sheet":
- the project's assets are housed in the SPV
- the guarantees are attached to the SPV
- the debts are borne by the SPV
👉 If the parent company runs into difficulties, the project's assets remain protected in the SPV. 👉 In the event of default, financiers can access the financed assets directly. This is the basis of project finance.
Obtain more debt (high leverage)
Thanks to risk isolation, banks generally accept:
- up to 80% to 90% debt financing
- only 10% to 20% equity contribution
This is much higher than in classic corporate financing.
Isolate the project's cash flows
The revenue generated by the project stays in the SPV:
- rents
- energy sales
- operating revenue
- tolls, royalties, etc.
The financier therefore analyses: 👉 the profitability of the project 👉 the SPV's repayment capacity and not that of the whole company.
Protect the parent company
If the project fails:
- the impact is limited to the SPV
- the operating company is preserved
The possible bankruptcy of the project does not "contaminate" the main company. Another advantage: the guarantees stay in the SPV (no pledge on the holding or the parent company).
Simplify financing management
All financiers operate at the SPV level:
- a single financing contract
- the same conditions for everyone
- a clear structure
This saves the parent company from managing several separate debts.
Improve financial readability
In direct financing by the company:
- the flows mix into the overall balance sheet
- it is difficult to track performance by project
With an SPV:
- all the flows are dedicated
- profitability is transparent
- the project's performance is readable
Amount, cost and time for an SPV
The SPV is generally relevant for financings 👉 above 1 million euros. Why?
- legal and structuring fees
- operating costs
- administrative complexity
For smaller amounts, other solutions are often more suitable. On cost, in practice: around €15,000 minimum, variable depending on complexity (legal fees + structuring). On time, the legal creation is quick (a few days to set up the company); the main delay comes from the structuring of the financing, the contracts and the exit scenarios. 👉 In practice: 1 to 3 weeks in simple cases.
Sectors where SPV financing is most used
The SPV is particularly suited to high-CAPEX projects:
Concrete examples of SPV use
1. Real estate SPV for an operating activity
A company runs a restaurant or thermal baths. Structure:
- SPV → buys the real estate
- operating company → operates
- lease between the two
Advantages:
- easier financing
- clear guarantees
- separation of operation / asset
2. SPV to finance equipment or assets
The SPV can buy:
- aircraft
- vehicles
- industrial machinery
- infrastructure
Then lease them to the parent company. 👉 A very common model in aviation and transport.
3. SPV in renewable energy
Example: a solar farm. The SPV:
- buys the land
- finances the installation
- bears the debt
- signs the energy contracts
The parent company:
- builds
- operates
- maintains
Each farm = one SPV.
How an SPV operates
The SPV can:
- have no employees
- delegate management to the parent company
- sign maintenance contracts
- sign operating contracts
The parent company acts as a service provider to the SPV.
Advantages
- strong debt leverage
- risk isolation
- protection of the parent company
- financial readability
- easier access to financing
- simplified multi-financier
Disadvantages
- legal costs
- contractual rigidity
- governed governance
- reporting obligations
Typical structure of SPV financing
Conclusion: when to use an SPV?
SPV financing is ideal when:
- the project is large (>€1m)
- the asset is identifiable
- the flows are dedicated
- the company wants to isolate the risk
- high debt leverage is sought
It is today a standard in project finance and a key tool for developing capital-intensive projects.
Frequently asked questions about the SPV
SPV or project company: is it the same thing?
Yes. SPV (Special Purpose Vehicle) is the English term; in French it is called a société de projet. It is a dedicated company, often an SAS, whose purpose is limited to the financed project.
How much debt can you obtain with an SPV?
Thanks to risk isolation, banks generally accept up to 80% to 90% debt financing, with only 10% to 20% equity contribution — much more than in classic corporate financing.
From what amount is an SPV relevant?
Generally above around 1 million euros, because legal fees, operating costs and administrative complexity make the structure less suited to small financings.
How much does an SPV cost and how long does it take to set up?
Around €15,000 minimum (variable depending on complexity), and 1 to 3 weeks in simple cases — most of the delay coming from the structuring of the financing, not the legal creation.
Structure the financing of your project
SPV set-up, debt and investor sourcing, structuring: Collaboration Capital supports you in financing your capital-intensive projects.
Discuss my financing