What is loan syndication?

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Loan syndication is the process of involving several different lenders in providing various
portions of a loan. Loan syndication most often occurs in situations where a borrower
requires a large sum of capital that may be too much for a single lender to provide or
outside the scope of a lender’s risk exposure levels. Thus, multiple lenders work together
to provide the borrower with the capital needed.

Loan syndication is used in corporate borrowing. Companies seek corporate loans for a
wide variety of reasons. Loan syndication is commonly needed when companies are
borrowing for mergers, acquisitions, buyouts, and other capital projects. These types of
capital projects often require large loans; thus, loan syndication is mainly used in
extremely large loan situations.