What Are Bilateral Loans?

A bilateral loan is one between an individual and one lender. This type of loan is the opposite of a syndicated loan, which is a loan between an individual and multiple lenders. Bilateral loans are typically much less complicated than syndicated, since the lender has more control over the terms and conditions surrounding the loan. As a bilateral loan amount is generally smaller than a syndicated loan, the loans are much less expensive for the borrower. Lenders take a much greater risk when combining efforts to provide a loan to a person, and with higher risk comes a higher fee.

Bilateral loans are the most commonly seen type of loan because larger syndicated loans are usually used by large corporations to finance extremely large projects. For smaller businesses and smaller projects, a bilateral loan is usually the best option. Since different lenders will have different terms and conditions to their loan programs, the individual can shop around to find the best deal on the loan to get the funds he needs while ensuring he does not pay too much money to have access to those funds. 

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