Syndicated loan - it is nothing but a special type of lending, which is characterized by the average maturity, provided the borrower is not one, but several banking institutions.It is understood that there is cash pooling these banking institutions.
syndicated loan is not recognized as a separate method of lending.In fact, he is only one of many forms, and suitable borrowers and lenders.
syndicated loan, its shape
An important feature of this loan is that it is given in a very large scale.In some cases, the loan amount can be up to twenty million dollars.For this reason, it shall be entitled to receive only legal entities.Borrowers may be holdings companies, large companies, various financial institutions.Often act as borrowers and banks.There were cases when to use state.
syndicated loan has several forms.Here are the main and the most popular ones:
- equity.Its features that give it the same time, several banks jointly implement the agreement on the loan.In this case, they can sell your participation in the transaction;
- Club.Funds are provided in full the managing group of banks.
Syndicated loans largely specific.Their main advantages are as follows:
- upon receipt drawn up a specific timetable.The graph should be, first of all, it is convenient to the borrower.According to him in the future and will be made cash payments;
- the borrower can get a multi-credit.Also worth noting is that the currency is at any time can be changed;
- all the banks that are involved in lending, are in identical conditions.This means that the cost of debt can be remarkably reduced;
- a special group of the consortium.She issued a package of documents setting out all the credit requirements, identifying possible risks.All this reduces the time of the loan.The scheme itself is also getting easier;
- as mentioned above, the size of the syndicated loan are very large.The amount to be issued under it, may be issued to any one individual bank.In some cases, large enterprises can take the necessary further development and reconstruction funds only from several banks at once.
course, to issue syndicated loans involving only specialize in the bank.They are something of an organized group, which performs various functions.This is the dominant, managerial, administrative functions.Payments are made through an administrative bank.
All banks involved in issuing such a loan, have many advantages.The syndicate for financial banking institutions is convenient because the risks of each of the banks individually are reduced considerably.It should be noted that the consortium, which was created by the banks, is not constant, and there is only within the framework of specific projects.
Before obtaining a syndicated loan to the borrower will be required to determine the order in which it is banking structures, he would like to get the necessary funds.Practice shows that in order to avoid various kinds of paperwork, and just for the convenience of the borrowers are turning to the banks that they have advised friends or those with whom they have collaborated before.
After the necessary checks and determine the amount of the syndicated loan, held a meeting at which should be attended by representatives of all interested banks.All terms are defined for further work on it.
