Loan Syndication Stages (Process), Advantages & more (2024)

FAQs

What are the different stages of a syndicated lending process? ›

Ans: There are three stages in the loan syndication process. First is the pre-mandate stage. This is followed by the loan placement and disbursem*nt stage, and finally, the post-closure stage.

The first stage of the loan syndication process is the pre-mandate stage which is initiated by the borrower. The stage involves the borrower either liaison with a single lender or inviting competitor bids from multiple lenders. The borrower has to mandate to the lead bank.

There are four main types of syndicated loan facilities: a revolving credit; a term loan; an L/C; and an acquisition or equipment line (a delayed-draw term loan).

The typical journey of a loan from submission of documents to disbursem*nt goes through four stages: loan signing, loan funding, recording, and disbursem*nt.

In general, the mortgage loan process involves Application Acceptance, Offer for Property, Loan Application, Loan Processing, Underwriting of the Loan, and Release of the Loan Amount, or Closing.

Three common types of syndication are: first-run syndication, which is programming that is broadcast for the first time as a syndicated show and is made specifically to sell directly into syndication; off-network syndication (colloquially called a "rerun"), which is the licensing of a program whose first airing was on ...

Types of syndicated loans

There are three main categories of syndicated loan: underwritten deals, best-efforts syndication deals, and club deals, each with their own specific terms and structures.

In most cases – almost entirely true in the case of syndicated companies and corporations – the primary purpose is to promote goods and services and increase profits for all the entities involved.

How does the syndication process work? ›

Syndication is the process by which banks and investors join to make a loan to a company (creating a syndicate of banks). With their client, the banks define the characteristics of the loan and work on key points to enhance the project.

In a syndicated loan, two or more banks agree jointly to make a loan to a borrower. Every syndicate member has a separate claim on the debtor, although there is a single loan agreement contract. The creditors can be divided into two groups.

During each phase of the loan process, a borrower will work with different members of the loan team. The three stages of every loan are the application, underwriting and closing.

The Arranger(s) uses its “commercially reasonable efforts” to syndicate the loan to Lenders, but does not commit to fund the entire loan amount. The Arrangers instead agree to fund a portion of the loan amount requested by the Borrower.

A syndication agreement is reached between a borrower and a bank (or a financial institution), which arranges the syndication. The arranger bank identifies one or more banks or financial institutions that pool funds to meet the borrowing requirements. These banks or institutions are known as participants.

Syndication rights typically last for six consecutive showings of a series within three to five years; if a program continues to perform well enough in broadcast or cable syndication during the initial cycle, television stations or cable networks can opt to renew an off-network program for an additional cycle.

A syndicate is a temporary alliance formed by professionals to handle a large transaction that would be impossible to execute individually. By forming a syndicate, members can pool their resources together, and share in both the risks and the potential for attractive returns.