Loan Syndication

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Definition: Loan Syndication

Loan Syndication is a set up in which a group of lenders referred as a syndicate, provides a loan for a single borrower.

Sometimes there may be a syndicate of banks as well. The loan amount is generally bigger than bank loans. The higher number of lenders evens out the risk in case of default.

The lender providing the biggest set is referred to as the Lead lender or arranger.

Characteristics of loan syndication

  • Large amount of loan
  • Spreading of risk
  • Stakes higher
  • Interest rates- fixed or floating

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