A type of mini perm financing that, if not refinanced before maturity, results in an event of default. Typically, these loans must be refinanced within five or seven years of disbursement.

A hard mini perm financing structure offers many advantages including the ability of the lenders to reprice the loans at then prevailing market rates. However, if the credit markets have tightened in the interim and refinancing is difficult or too expensive, this structure creates a default risk that may result in the termination of the project. As a result, many lenders and borrowers prefer the soft mini perm financing structure that incentivizes, but does not obligate, refinancing of the loans.

For more information on these issues, see Practice Notes, Project Finance: Overview, Project Finance: Sources of Available Financing and Financial Covenants: Project Finance Transactions, and Project Finance Waterfall Provision Flowchart.

For more information on financing sources available to repay these loans, see Practice Notes, Sources of Available Project Financing: Term Loan B Facilities and Sources of Available Project Financing: Project Bonds.