Syndicated loan

A syndicated loan is one that is provided by a group of lenders and is structured,

arranged, and administered by one or several commercial banks or investment
banks known as arrangers.
A very large loan in which a group of banks work together to provide funds for
one borrower. There is usually one lead bank that takes a small percentage of the
loan and syndicates the rest to other banks.
Loan extended by a group of banks to a corporate borrower. The loans-usually
made at interest rates tied to a variable rate index such as the London Interbank
Offered Rate (LIBOR) or rates on Bank Certificates of Deposit-are often sold to
investors in the secondary loan market. In recent years, institutional investors
such as mutual funds became major buyers of syndicated loans.
Structured finance
Structured finance is a broad term used to describe a sector of finance that was
created to help transfer risk using complex legal and corporate entities. This risk
transfer as applied to securitization of various financial assets (e.g. mortgages,
credit card receivables, auto loans, etc.) has helped to open up new sources of
financing to consumers.
 Securitization
 Tranching
 Credit Enhancement
 Credit Ratings
A service offered by many large financial institutions for companies with very
unique financing needs. These financing needs usually don't match conventional
financial products such as a loan. Structured finance generally involves highly
complex financial transactions.
TFC
Certificate of Deposit with a longer-term maturity date. Such CDs can range in
length from one year to ten years, though the most popular term certificates are
those for one or two years. Certificate holders usually receive a fixed rate of
interest, payable semiannually during the term, and are subject to costly Early
Withdrawal Penalties if the certificate is cashed in before the scheduled maturity.
Certificate of Deposit with a long maturity date. Such CDs can range in length
from one year to ten years, though the most popular term certificates are those
for one or two years.
A certificate of deposit with a maturity of greater than one year. Term certificates
pay more in interest to compensate for the time value of money.
Overdraft
An overdraft occurs when withdrawals from a bank account exceed the available
balance. In this situation a person is said to be "overdrawn".
Working capital financing
Working capital financing is essential to any growing business. It helps keep your
business current and competitive in your market. If you have commercial real
estate or equipment that produces an income for your business, you can obtain
working capital financing that can help pay down credit lines or accounts payable,
freeing up money for growth opportunities. Before attempting to obtain this type
of loan make sure that you have established good business credit scores. These
credit scores will make a big difference when the lending institution is
determining whether to give your business the money that it needs to succeed.
Import Finance
Whether you use documentary credits or collections for your imports, there may
be times when you need funding to allow you to fulfil your trade commitments.
Businesses that import and export goods can benefit from financing through what
are known as import and export loans. Such loans use the goods being shipped —
or proof of the transaction — as the loan collateral. An import and export loan
can help your business improve its cash flow as well as enhance its bargaining
power with overseas suppliers.
If you trade on Documentary Credit or Documentary Collection Terms, or
purchase goods without the use of trade instruments, you can apply for a loan
known as a Loan Against Import (LAI). This loan provides the borrower with
financing to pay for the goods being imported. Such prompt payment helps you to
maintain good payment terms and enhance your business credit rating. The
collateral for the loan are goods themselves, which take time to be shipped to
their location and are then held as new inventory before being sold or used.
The term of an LAI loan is essentially the time from receipt of the goods until the
time when they are ready to be sold, since the lender owns the goods until the
loan is repaid. Trust receipts are released to the borrower, which mean that the
goods can be used for manufacturing, but may not be sold while they remain in
the possession of the lender.
The second type of import loan, known as a Clean Import Loan, is a loan based
solely on the supplier invoice. This type of loan does not require that you pay on
Documentary Credit or Documentary Collection Terms.
The benefit of a Clean Import Loan is that it provides a business owner with the
money to pay suppliers without having to wait to sell the merchandise first. This
can be a huge benefit, because most shippers do not want to wait for your
company to sell the goods before they receive payment for them.
Discounting Recievables
Obtaining a working capital (short-term) loan against the discounted value
(usually 80 to 90 percent of the invoiced amount) of accounts receivable (A/R)
that meet the lender's creditworthiness criteria. The lender does not buy the A/R
but only uses them as a collateral. In case of a default, however, the lender has
the right to collect direct from the borrower's debtors.
Pre-export Financing Programs
There are three types of pre-export financing programs. They are Working Capital
Guarantee Programs, Small Business Administration and Banker's Acceptance
programs.
Working Capital Guarantee Programs (through Government Agencies: Pre-export
Financing)
 * U.S. Government Export-Import Bank guarantees working capital loans made
by Key
* Loan proceeds must be used to produce goods and services for export
* Guarantee of principal and interest
* Guarantor is fully secured and establishes advance rates
Small Business Administration (Export Working Capital Program)
* Similar to Export-Import Bank program
* Maximum loan value is $833,333
* Guarantee is 90 percent
* Can support sales of military equipment
* SBA is fully secured
Banker's Acceptances (Pre-export)
* Parameters -- Draft drawn on commercial bank for tenor up to six months
* Purpose -- Must support export sale
* Bankers Acceptance must be created within 30 days of shipment of the
finished goods
* Bankers Acceptance must be self-liquidating and may not be used for general
working capital purposes
* No duplication of financing
* Must have evidence of contract or signed purchase order