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In a syndicated loan, different banks arrange for the loan money. They might interact with the borrower independently to design the loan terms. The syndicated loan may be arranged by one or more lead banks and then parceled out to the others.

However, in a participation, there are two relationships - one between the borrower and the lead bank , second between the lead bank and the participant. The participant does not have to maintain any relation with the borrower but is ensured a part of the proceeds by the lead bank, that is solely responsible for servicing the loan and maintaining relationships with the borrower.

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โˆ™ 2009-10-16 18:30:16
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Q: What is difference between syndication loan and participation loan?
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Related questions

What is the difference between loan syndication and consortium finance?

The main difference between loan syndication and consortium finance is that syndication is done based on common terms between the lender and borrower. Consortium finance has to be arranged by the borrower, such as when one bank cannot accommodate the entire loan amount.

Difference in loan syndication and multiple banking?

multiple banking is use of more than one bank while loan syndication is where several banks lend the money for one loan.

What are the benefits of syndication?

what are the benefits of loan syndication

What are the reasons why financial institutions go into loan syndication?

A syndicated loan is the opposite of a bilateral loan, which only involves one borrower and one lender (often a bank or financial institution.) A syndicated loan is a much larger and more complicated version of a participation loan. There are typically more than two banks involved in a syndication.

What is the difference between a bank loan and a bank credit?

What is the difference between bank loan and bank credit?

What is the definition of the phrase loan syndication?

The definition of the phrase syndication loan is: "A loan offered by a group of lenders who work together to provide fund for a single borrower." The borrower could be a corporation, a large project or a government.

What is the difference between syndication of loan and consortium finance?

syndication of loan is arranged by a lead arrangers and it is on common terms which is finalised between borrower and arranger where as in consortium loan borrower has to arrange the finance himself from different bank this finance on different term and at different pricing Loan Syndication and Consortium finance is resorted to when a client needs a huge loan which a single Bank either cannot provide or cannot take risk to provide. In Loan Syndication, a large bank approaches the client, fixes up the terms and conditions, interest rates etc. Thereafter, he approaches other Banks for "selling" of this loan. The other banks ,if agree, "purchase" a part of the loan on the same or different terms and conditions. In Loan Syndication, the client deals with one Bank only. In Consortium Finance, a Large Bank approaches the client, collects the information about amount of loan, terms and conditions and then calls a meeting of other Banks. Those who agree to lend the money approach the client and the client fixes up the loan with each of them separately. The follow-up and other jobs is done by the Leading Bank of the consortium which is mutually decided by the participating Banks.(Need not be the highest lender).

Mba projects topics in finance for banking sector?

loan syndication handling

What is the difference between a scholarship and a loan?

A scholarship is a gift, which does not have to be paid back. A loan does.

Who are the parties to a loan syndication?

lead bank managing bank participating bank borrower

How interest is calculated in loan syndication?

interest=princibal x rate x time

What are the limitations of net present value in evaluating business profitability?

benefits of loan syndication

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