1. A loan with a below-market rate of interest.

2. Loans made by multinational development banks and the World Bank to developing countries. Typically, soft loans have extended grace periods in which only interest or service charges are due. They also offer longer amortization schedules and lower interest rates than conventional bank loans.

Investopedia Says:
Also known as "soft financing".

Related Links:
They print money, they control inflation, and much, much more. All you need to know about central banks is here. What Are Central Banks?
Learn the functions of the U.S. Treasury, and find out how and why it issues debt. What Fuels The National Debt?

Copyright ©2010, Investopedia.com - Owned and Operated by Investopedia US, A Division of ValueClick, Inc. All rights reserved.