diff --git a/packages/node_modules/@node-red/runtime/lib/storage/localfilesystem/projects/index.js b/packages/node_modules/@node-red/runtime/lib/storage/localfilesystem/projects/index.js
index 4fee06a45..674b380e6 100644
--- a/packages/node_modules/@node-red/runtime/lib/storage/localfilesystem/projects/index.js
+++ b/packages/node_modules/@node-red/runtime/lib/storage/localfilesystem/projects/index.js
@@ -137,17 +137,21 @@ function init(_settings, _runtime) {
                                     saveSettings = true;
                                 } else {
                                     // if it resolves to a dir - use it
-                                    var stat = fs.statSync(fspath.join(projectsDir,settings.flowFile));
-                                    if (stat && stat.isDirectory()) {
-                                        activeProject = settings.flowFile;
-                                        globalSettings.projects.activeProject = activeProject;
-                                        // Now check for a credentialSecret
-                                        if (settings.credentialSecret !== undefined) {
-                                            globalSettings.projects.projects[settings.flowFile] = {
-                                                credentialSecret: settings.credentialSecret
+                                    try {
+                                        var stat = fs.statSync(fspath.join(projectsDir,settings.flowFile));
+                                        if (stat && stat.isDirectory()) {
+                                            activeProject = settings.flowFile;
+                                            globalSettings.projects.activeProject = activeProject;
+                                            // Now check for a credentialSecret
+                                            if (settings.credentialSecret !== undefined) {
+                                                globalSettings.projects.projects[settings.flowFile] = {
+                                                    credentialSecret: settings.credentialSecret
+                                                }
+                                                saveSettings = true;
                                             }
-                                            saveSettings = true;
                                         }
+                                    } catch(err) {
+                                        // Doesn't exist, handle as a flow file to be created
                                     }
                                 }
                             }