Bilateral, syndicated and club arrangements


Published by a ³ÉÈËÓ°Òô Banking & Finance expert
Practice notes

Bilateral, syndicated and club arrangements


Published by a ³ÉÈËÓ°Òô Banking & Finance expert

Practice notes
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One of the key features used to categorise loans is the number of lenders involved. A loan involving one lender is known as a 'bilateral loan'. A loan involving more than one lender may be a 'syndicated loan' or be referred to as a 'club loan'. Multiple lenders can also be indirectly involved in the same loan by way of sub-participation.

This Practice Note explains the key features of bilateral loans, syndicated loans and club loans.

Bilateral loans

A bilateral loan is a loan involving a single lender. There may be a single borrower or multiple obligors involved, ie the borrower and other companies in the borrower's group as guarantors and/or security providers.

Bilateral loans are normally used for loans of relatively small amounts and where less complex financing arrangements are required (eg a simple overdraft or term loan). Where the borrower requires a larger loan, a single lender may be unwilling or unable to advance the full amount required by the borrower. In these cases, a syndicated or club loan may be a better option.

Syndicated

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Jurisdiction(s):
United Kingdom
Key definition:
Loans definition
What does Loans mean?

Occupational pension scheme resources may not at any time be invested in an employer-related loan. In accordance with section 40 of the Pensions Act 1995, employer-related loans are: loans to the employer or any such person; shares or other securities issued by the employer or by any person who is connected with, or an associate of, the employer; or employer-related investments eg a guarantee or security for obligations of the employer. This does not apply in respect of small self-administered schemes (SSASs) and self-invested pension plans (SIPPs).

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