participation loan

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Definitions from WordNet

Noun participation loan has 1 sense

participation loan, loan participation, participation financing - a loan that is shared by a group of banks that join to make a loan too big for any one of them alone
--₁ is a kind of loan

Definitions from the Web

Participation Loan

Definition

A participation loan is a type of loan in which multiple lenders fund a loan to a single borrower. Each lender has a percentage share in the loan and shares in both the risks and rewards of the loan.

Senses and Usages

1. Financial Sense

In the financial sense, a participation loan refers to a collaborative loan arrangement where several lenders pool their funds to provide financing to a borrower. This type of loan allows lenders to diversify risks and take advantage of larger loan opportunities that may exceed their individual lending capacity.

Example:

Many small local banks joined forces to offer a participation loan to the startup to support its expansion plans.

2. Real Estate Sense

In the real estate industry, a participation loan refers to a loan structure where the lender provides a portion of the necessary capital for a project, while the borrower contributes the remaining funds. This type of loan allows the borrower to share in the project's profits, often in addition to making interest payments.

Example:

The developer entered into a participation loan agreement with the bank, granting the bank a percentage of the project's profits in exchange for funding the construction.