Syndicated vs Bilateral Finance

Michal Gunzenhauser - March 24, 2022

What is syndicated finance?
A syndicated loan, or a syndicated bank facility, is simply a loan agreement concluded between an individual borrower and several different lenders. A syndicated business loan involves several entities, namely the borrower of the funds, multiple lenders and the arrangers, who will locate the actual entities who will be loaning the funds to the individual borrower. The lenders are collectively known as a “syndicate”, and these entities work together to provide funding to the borrower.

Who can take out a syndicated loan?
The borrower can be anyone from a corporation, a large project or even a government. The loan itself may be a single, fixed amount of funds, a line of credit or a combination of both.

What is bilateral finance?
A bilateral business loan is, as the name suggests, a loan agreement entered into between an individual borrower and a single lender. There are only two parties involved, making it a simpler loan than a syndicated loan.

Should you take a syndicated loan or bilateral loan for your business?
The primary reason a syndicated loan would be required is when the required funding is too great for a single lender, or if funds are required from a lender with expertise in the specific class of assets for which the funding is required. Syndicating the finance also spreads the risk between multiple lenders, so that they are able to take part in the opportunity, with a limited impact on their capital. A syndicated business loan is best suited for a large business, or in respect of a large expense.
Bilateral loans will have simpler agreements, and are more commonly used by small business owners who require additional funding for starting a new business, or expanding an existing business.

Who facilitates a syndicated loan?
An attorney can act as the arranger, particularly in terms of a syndicated loan. The fees of the arranger will depend on the amount of funds required, as well as the credit score of the borrower.

What is the role of an attorney in syndicated and bilateral finance?
While bilateral loan agreements will largely have the same terms and conditions, it is important to have the agreement drafted or checked by an attorney you trust, in order to identify potential loopholes and irregularities, which may place you in a negative position at a later stage, should a dispute arise.

With syndicated loan agreements, an attorney may act as the agent, and is a crucial element in obtaining the loan. The agreements for a syndicated loan will be more complex, and require an attorney with experience in order to protect your position, be it as a lender or borrower.

Michal Gunzenhauser

Michal Gunzenhauser

Managing Partner


best car scratch removers min 2
The Panel Beater Damaged My Car
Who is liable when a vehicle is damaged during repairs & services?  A panel beater, mechanic or dealership is responsible...
Read more
hero D min 2
Can You Steal IP?
What is Intellectual Property theft?  Owing to the fact that Intellectual Property (IP) is intangible, it is difficult to understand...
Read more
How To Get Out Of A Contract
How To Get Out Of A Contract
What is a contract?  A contract isn’t just a piece of paper. It has specific, defined elements: it is an...
Read more
Is Corporate Espionage Actually A Crime?
Is Corporate Espionage Actually A Crime?
What is corporate espionage? While it conjures images of a spy stealing top secret documents, Corporate Espionage, which is also...
Read more