Loan Participation (Noun)
Meaning
A loan that is shared by a group of banks that join to make a loan too big for any one of them alone.
Classification
Nouns denoting possession and transfer of possession.
Examples
- The bank syndicate was formed to facilitate a loan participation that would allow multiple lenders to share the risk of a large corporate loan.
- The loan participation agreement outlined the terms and conditions of the shared loan, including the interest rate and repayment schedule.
- By participating in the loan participation, smaller banks were able to gain exposure to large commercial lending opportunities that would otherwise be out of their reach.
- The loan participation was structured as a senior secured loan, with multiple banks contributing to the overall loan amount.
- The benefits of loan participation include risk diversification and increased lending capacity, making it an attractive option for banks looking to expand their commercial lending activities.