Loan Syndication is a form of loan business in which two or more lenders jointly provide loans for one or more borrowers on the same loan terms and with different duties and sign the same loan agreement.
Characteristics of loan syndication
- Large amount of loan
- Spreading of risk
- Stakes higher
- Interest rates- fixed or floating
- Large amount and long term. It can meet borrowers’ demand for funds of long term and large amount.
- Less time and effort for financing. It is usually the responsibility of the arranger for doing the preparation work of establishing the syndicate after the borrower and the arranger have agreed on loan terms by negotiation
- It can help borrowers establish a good market image.