What does loan participation mean?
Definitions for loan participation
loan par·tic·i·pa·tion
This dictionary definitions page includes all the possible meanings, example usage and translations of the word loan participation.
Princeton's WordNet
participation loan, loan participation, participation financingnoun
a loan that is shared by a group of banks that join to make a loan too big for any one of them alone
Wikipedia
loan participation
Participation loans are loans made by multiple lenders to a single borrower. Several banks, for example, might chip in to fund one extremely large loan, with one of the banks taking the role of the "lead bank". This lending institution then recruits other banks to participate and share the risks and profits. The lead bank typically originates the loan, takes responsibility for the loan servicing of the participation loan, organizes and manages the participation, and deals directly with the borrower. Credit unions can also participate loans in the same manner. "Participations" in the loan are sold by the lead financial institution ("FI") to other FI's. A separate contract called a loan participation agreement is structured and agreed among the FI's. Loan participations can either be made on a pari passu basis with equal risk sharing for all loan participants, or on a senior/subordinated basis, where the senior lender is paid first and the subordinate loan participation paid only if there are sufficient funds left over to make the payments. Such senior/subordinated loan participations can be structured either on a LIFO (Last In First Out) or FIFO (First In First Out) basis (see FIFO and LIFO accounting).
ChatGPT
loan participation
Loan participation is a financial activity in which multiple entities share in the lending of a loan to a single borrower. This process reduces the risk for individual lenders by diversifying the loan across several participants. The initial lender may sell portions of the loan to other lenders, or several lenders may jointly fund the loan from the beginning. This practice is frequently seen in commercial lending, wherein the amount of money involved in the transaction is substantial.
Matched Categories
Numerology
Chaldean Numerology
The numerical value of loan participation in Chaldean Numerology is: 8
Pythagorean Numerology
The numerical value of loan participation in Pythagorean Numerology is: 4
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"loan participation." Definitions.net. STANDS4 LLC, 2024. Web. 1 May 2024. <https://www.definitions.net/definition/loan+participation>.
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