Project Finance · Question

Does my own money go in before the lender releases project loan tranches?

Short answer

Often yes, but not always. Many lenders ask that the promoter's contribution is spent first, or alongside the first tranche, so the lender is never funded ahead of the owner. Others allow a pro-rata mix in the sanctioned ratio. The order is fixed in the sanction terms, so settle it before you commit any cash.

In more detail

Think of the loan as a set of gates rather than a single cheque. The sanction letter, together with the means of finance in your plan, sets out how the total cost is paid for: your contribution, the lender's term loan, and any other sources. The tranche schedule then says which source pays at which point.

Many lenders ask that the promoter's contribution goes in before or alongside the loan, so the lender is never exposed ahead of the owner. Others allow a pro-rata mix, where each payment is funded from both sources in the sanctioned ratio. Which model applies is a negotiation point worth settling at sanction, because it affects how much cash you must arrange up front.

What typically triggers a tranche:

Completion of a physical milestone, such as site development, civil structure or machinery installation.
Fresh evidence of expenses incurred and paid.
Compliance with conditions, such as renewed insurance, creation of security or a statutory approval.
A clean account record on any other loans with the lender.

A general picture of tranche triggers
Stage of project	What a lender commonly looks for
Early works and land development	Promoter money deployed, title and permissions in place
Structure and civil works	Verified progress and paid bills
Plant and machinery	Orders placed, advances paid, supplier documents
Trial and start of operations	Installation complete, required licences obtained

Keep a buffer. Costs often rise during construction, and a lender will not automatically fund an overrun, so decide early how you will meet one. If an overrun is likely, speak to the lender before spending, since a pre-agreed arrangement is easier than a request after the fact.

Key points

Tranches are gates tied to milestones, evidence and conditions, not to dates alone.
Your own contribution may need to go in first or in a sanctioned proportion with the loan.
Settle the contribution sequence at sanction, since it decides your early cash need.
Cost overruns are not automatically funded, so plan how you would meet one.
The sanction letter is the final word on schedule and triggers.

Who this applies to

Promoters planning cash flow for the construction period.
Finance heads mapping funding sources to project stages.
Owners reading a draft sanction and trying to understand its release schedule.

Last reviewed 3 October 2026

This answer is general information, not advice on your particular case. Terms, eligibility, and requirements change, so check the current position with the relevant institution or authority.