A syndicated loan is a loan offered by a group of lenders that work together to provide funds for a single borrower. Syndicated loans provide both the lender and the borrower a plethora of advantages. For example, the lender does not have to take on the full amount of the entire loan. If the borrower needs more money, they can gain the cash flow immediately from several lenders. This is only one of many ways syndicated loan benefits your company.
Since syndicated loans can spread out among many lenders, there’s a good chance of networking and creating brand new banking contacts. One lender doesn’t need to do it all, so their efforts are spread out across the board. This allows them to take on more loans and at the same time, limit their exposure and risk. The borrower has the ability to spread out to several institutions and increase their visibility within the syndicated loan market.
Much of the weight is taken off the lenders’ shoulders with syndicated lending. Only one of the lenders involved in the transaction becomes the “key agent,” granting them administrative abilities and streamlining the process for other loan participants. Borrowers can actually save costs by raising funds in a syndicated loan market as opposed to borrowing money through a series of loans. The cost savings largely boil down to the borrower signing a contract with a group of lenders versus signing contracts with several individual lenders. Doing so not only saves money, but time as well.
Borrowers have extra leeway with syndicated loans. The loan pricing and structure can be incredibly flexible. Borrowers are granted more options in shaping their loan, including multicurrency options, risk management techniques, and no-penalty prepayment rights. Loan terms can also be abbreviated. Not only can syndicated loans provide flexibility and comfort to the process, but signing on to a syndicated loan can put you in front of the market and expose you to new contacts and more competition for your business. This exposure can bring you incredible opportunities that would not be available otherwise.
Does taking the syndicated loan route sound right for you and your company? Visit Hitachi Business Finance – Syndicated Loans today