Term Loan Syndication
Term loan syndication, which is also known as syndicated Bank Loan facility, is offered by the group of lenders usually known as a syndicate. These syndicates work together for funding of single borrower. The single borrower to which the loan syndication is being done could be a large Organization, any Project, Small Medium Industry or Corporation. Usually, one lender is appointed as the lead lender to manage and administers the Loan amount on behalf of all syndicate members.
Loan Syndication arises when the loan amount is quite bigger or too high risk or sometimes the collateral may be in different locations or the use of fund may require expertise to manage. When lender limits their loan amount, they simultaneously restrict their risk too. Term loan Syndication consists upon credit line, a fixed amount of fund or sometimes a little of both. The reason behind involving too many lenders in this loan is to provide the loan to some big borrowers. All the lenders have to agree on the loan agreements.
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