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Loan (Debt) Syndication FAQs

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Terkar Capital
 Loan (Debt) Syndication FAQs

Syndication is a concept that is in widespread use today. Syndication takes place when a loan asked by a business or corporate is too large for one financial institution to lend. There are different aspects of loan syndication including syndication and consortium. Here are some of the general Questions which customers ask about syndication:


What is meant by loan syndication? 


Loan syndication is a process by which more than one lenders are involved in funding a loan for a business or corporate. This group of lenders lends various portions of the loan. Loan Debt Syndication is generally undertaken when the amount required by the business is too large for one financial institution to lend or when the loan is not within the scope of a lender’s risk exposure levels. Various lenders form a syndicate and provide the business with the required funds. 

What is the difference between syndication and consortium?


A consortium is successful when one single financial institution cannot fund the loan amount to the borrower. Various financial institutions club together to supervise the said loan amount.  A consortium unlike syndication is not built to deal with international transactions. A consortium is usually bound by a legal contract that delegates responsibilities among its members.


Loan Syndication also involves multiple lenders and a borrower but loan syndication generally involves international transactions and sometimes different currencies. Loan syndication is usually headed by a managing bank that is approached by the business to arrange the credit. This managing bank is generally responsible for negotiations of conditions and arranging the loan. 


What is a syndication agent?


A syndication agent is generally a bank or a financial institution that acts as an agent for a group of lenders in the process of syndication of a loan. The syndication agent plays a key role in the syndication of loans for businesses and corporations. The syndication agent should be reliable and can negotiate the rate of interest and other terms and conditions for the borrower, so the borrower can get the best deal from the market.


Why are loans syndicated?


Loans are generally syndicated because one financial institution cannot lend the entire amount of money to the borrower. For example, a business may need a large number of funds. If the amount is too large for one bank or financial institution, then the business can be given funding through loan syndication. Loan Syndication can be used in cases when the amount to be lent is too large and too risky for one financial institution to lend.


Why Terkar Capital for Debt Syndication?

 

If you’re looking for effortless and trustworthy debt syndication services in India, Terkar Capital is the best place for you. We provide expert analysis of the product and we choose the right lenders for the syndication. We also boast of quick turnaround time and provide timely and optimum availability of funds. Our expert team will provide you with the complete and perfect end to end execution of the syndicate process.



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