Debt finance

The common lending structures are Financial Banking institutions.

Lending in Australia may be structured in a number of different ways to include a variety of features, depending on the commercial aims of the parties.

A loan may be provided on a bilateral basis (a single lender providing the entire facility), a syndicated basis (multiple lenders each providing a portion of the overall facility) or a club basis (multiple lenders lending bilaterally in parallel).

Syndicated facilities by their nature involve more parties (such as an arranger, an agent and a security trustee which each carry out a specific role for the syndicate banks), are more highly structured and involve more complex documentation. Large financings will typically be done on a syndicated basis, with one of the syndicate taking the lead in coordinating and arranging the financing.

Club facilities involve multiple lenders lending bilaterally to the borrower in parallel to each other on materially similar terms. Club facilities usually do ot involve a facility agent (at least for payment purposes) and they lack syndication terms which dictate funding mechanics, payment distribution, sharing provisions and lender voting regimes. A club facility may be documented in a variety of ways, including by:

• a deed of common provisions which are adopted wholly or in part by each lender under its facility agreement;
• individual, but largely identical, bilateral loan agreements; and
• a single document similar to syndicated loan agreement, but without a payment agent or syndication terms.

Loans will be structured to achieve the borrower’s specific funding objectives. For example, they may be term loans, revolving credit facilities, working capital loans, equity bridge facilities, project facilities and letter of credit facilities, to name a few.

Loan durations

Typically, the Australian banking market  accommodates commercial loan tenors of three to five years. Longer-term debt may be available in limited circumstances.

The duration of a loan may also be determined by its type. For example, typically:

• a term loan is provided for an agreed period of time but with a short availability period;
• a revolving credit facility is provided for an agreed period of time with an availability period that extends nearer to the date of its maturity. It may be redrawn if repaid;
• an overdraft is provided on a short-term basis to solve short-term cash flow issues;
• a standby or a bridging loan is intended to be used in exceptional circumstances when other forms of finance are unavailable. It often attracts a higher margin; or
• a cash advance, provided on a short-term basis to cover short-term cash flow issues and often attracting a higher margin.

In Australia, bill facilities are also used sometimes and they operate with bills maturing and ‘rolling over’ at set intervals (usually 30, 60, 90 or 180 days). Historically, loan note facilities have also been made available for stamp duty or income withholding tax purposes.

Loan security

A loan may be either secured, unsecured (including on a ‘negative pledge’ basis) or guaranteed.

Loan commitment

A loan may be:

• committed, meaning that the lender is obliged to provide the loan if certain limited conditions are fulfilled. Conditions precedent will be set out in the loan agreement; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

No conditions precedent will be set out in the loan agreement.

Loan repayment

A loan may be repayable:

• on demand,
• on an amortizing basis (that is, in instalments over the life of the loan or as may be scheduled); or
• upon maturity (commonly referred to as a 'bullet loan').

Lending in Belgium can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities or letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short term basis to solve short term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Brazil can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can vary between:

• a term loan, provided for an agreed final period of time;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Canada can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees who fulfil certain roles for the finance parties) and are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans are structured to achieve specific objectives (eg term loans, working capital loans, project facilities and letter of credit facilities).

Loan durations

The duration of a loan can vary among:

• a term loan, which is provided for an agreed period of time, usually 3-5 years;
• a revolving loan, which allows for the loan amount to be withdrawn, repaid and redrawn until the maturity date;
• an overdraft, which is provided on a short-term basis to solve short-term cash flow issues; and
• a standby loan, where the lender gives a commitment to advance a specified amount of money on demand or at a future date.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, which means that the lender is obliged to provide the loan if certain conditions are satisfied; or
• uncommitted, which means that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or on scheduled repayment dates (usually meaning the loan is repayable in full at maturity).

Lending in Chile can be structured in several ways depending on the commercial needs of the parties and the features of the project being financed. Common structures used in Chile are the term loan and the revolving loan.

Loan durations

The terms of the loans generally depend on the features of the corresponding transaction and the policy of each financial institution. However, over five years is considered a long term.

Loan security

Regarding project financing, usually the bank will secure lending obligations with several types of securities (i) over assets (pledge and mortgage agreements), (ii) personal guarantees such as sureties and joint and several guarantees and (iii) conditional assignment of rights regarding the main agreements of the relevant project. Please note that in Chile guarantees are accessory to the main obligation and may not exceed the amount of such obligation.

Loan commitment

May be committed or uncommitted.

Loan repayment

Can be repaid on demand, on an amortization basis, scheduled, or even by means of a bullet loan, where the entire loan is due at the end of the loan term.

The common structures of bank loans in Colombia are local or foreign loans, whether syndicated or not. Local loans are documented in a simple template promissory note and secured by personal guarantees. However, it is common to have foreign project finance structures for infrastructure projects with some complex guarantee structures covering assets and personal guarantees.

With respect to bank financing in Colombia for individuals, it is common to have mortgage loans, consumer credits, vehicle secured loans and leasing for housing or vehicles.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid; and
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled under the corresponding loan agreement; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan if the conditions provided in the corresponding loan agreement are not fulfilled.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan), scheduled (usually meaning the loan is repayable in full at maturity), or prepaid.

Lending in the Czech Republic can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility). The loan as such can take two basic forms:

• general loan – used mainly between professionals in the course of business; or
• consumer credit – a special form of loan (governed by a specific regulation – Act No. 257/2016 Coll., on Consumer Credit), with increased protection for consumers.

Loan durations

The duration of a loan can also vary, as follows:

• short-term loan (maximum one-year repayment period);
• medium-term loan (one-to-five-year repayment period);
• long-term loan (more than five-year repayment period); or
• revolving loan – provided for an agreed period of time (usually for one year) with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid.

Loan security

A loan can be secured, unsecured or guaranteed.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable:

• on demand (this is not very common);
• on an amortizing basis (in instalments over the life of the loan); or
• scheduled (usually meaning the loan is repayable in full at maturity).

In the case of consumer credit, there is a special regulation regarding premature repayment of loans which protects consumers against disadvantageous contractual clauses.

Lending in Finland can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, e.g. term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed.

Loan commitment

A loan can be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can be paid back in instalments of the same size consisting of a loan repayment portion and an interest portion. The size of the monthly instalment changes in line with changes in interest rates, but the loan period remains unchanged (annuity loan).

It can also be paid back in instalments of the same size consisting of a loan repayment portion and an interest portion. The size of the monthly instalment remains unchanged when interest rates change, nut the loan period changes (fixed instalment loan).

It can also be paid back in instalments consisting of a fixed loan repayment portion and an interest portion that changes as interest rates change. When interest rates change, the size of the monthly instalment changes, but the loan period remains unchanged (fixed period loan).

It can also be paid back in one instalment consisting of the whole loan amount at the end of the loan period, and during the loan period only interest payment shall be made.

There is no mandatory lending structure in France; lending can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities or project facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or in full on the maturity date.

Lending in Germany can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working-capital loans, equity bridge facilities, project facilities and letter of credit facilities.

A peculiarity in German law is the Schuldscheindarlehen – a specific financial instrument with a hybrid structure which sits between debt securities and bilateral/syndicated bank loans. Schuldscheindarlehen refers to an underlying loan agreement for which a separate borrower's note (ie Schuldschein) as documentary evidence of the loan debt is usually issued. Schuldscheindarlehen are exempt from the obligation to publish a prospectus under European prospectus law. They enable borrowers to gain access to institutional capital markets investors that usually cannot be reached via other bank financings. See the LMA Schuldschein Product Guide published by the Loan Market Association (LMA) for more information.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Various lending structures are used depending on the financing needs of the borrower and requirements of the parties. Loans may be provided by a single lender providing the entire facility or multiple lenders each providing parts of the total facility. 

Duration of loan 

A loan may be structured as a term loan, revolving loan, overdraft or bridge loan.

Security

Loans may be secured, unsecured or guaranteed.

Loan repayment

A loan may also be structured to be repayable in installments of both principal and interest over the life of the loan, by paying interest-only during the term of the loan with only the outstanding principal due at the end or repayable in full at maturity.

Lending in Hungary can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate members taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Ireland can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or on a syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loan Market Association documents are widely used in Ireland and are adopted for Irish law.

Loans will be structured to achieve specific objectives, e.g. term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan security

A loan can be either secured, unsecured or guaranteed. For more information, see Giving and Taking of Guarantees and Security.

Loan term

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan term is important as a longer term loan might incur more interest. Ensure that a guaranteed loan has an end date; for example, an overdraft account.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

 

Lending in Italy can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as the agent which fulfils certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific purposes, eg mortgage loans (including credito fondiario in relation to the financing of real estate assets), working capital loans, equity bridge facilities, bridge to cash facilities, project facilitiesand, letter of credit facilities and export facilities.

Finally, loans can be 'in cash' (finanziamenti per cassa), when the lender makes available to the borrower cash, or through the issue of documental guarantees in favour of third parties in the interest of the borrower (finanziamenti per firma).

 

Loan durations

The duration of a loan can vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn on a roll over basis;
• an overdraft, provided on a short-term basis to support short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain contractual conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or bullet (usually meaning the loan is repayable in full at maturity).

Lending structures in Ivory Coast depend on the parties’ projects and needs.

They can have recourse to individual lending where one lender provides for the loan or to syndicated loans where two or more lenders provide loans to one or more borrowers.

Syndicated loans involve large loans where the different participating banks share the risks as their liability is limited to the amount of their contribution.

Those syndicated loans are very complex transactions requiring the appointment of facility agents. Security agents are also appointed as provided for under Article 5 of the Uniform Act on Securities adopted on December 15, 2010.

Loans structuration depend on different parties’ objectives, they can be commercial loans, concessional loans, non-concessional loans, equity loans, long term loans, short term loans, or alternative forms of financing.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for a set period of time that usually lasts between one and ten years but can last a bit longer up to thirty years;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be withdrawn, repaid and redrawn if repaid; it provides for more flexibility and it can be reused as it is repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a bridge loan gives access to short term loans that allow to meet short-term liquidity gaps or needs.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, refer to, among other texts, the Uniform Act on Securities.

Loan commitment

A loan can also be:

• committed, whereby it provides for terms and conditions imposed on the borrower and the lender is obliged to provide the loan if those terms and conditions are fulfilled; or
• uncommitted, meaning that the lender is not committed to provide the loan.

Loan repayment

The funds can be repaid on demand, in instalments, or scheduled to be repayable in full at maturity.

Lending in Japan can be structured in a number of different ways to include a variety of features, depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or a syndicated basis (multiple lenders each providing parts of the overall facility). Facilities can be divided into tranches for instance, with senior and mezzanine loans.

Syndicated facilities in tranches by their nature involve more parties (such as agents, trustees and senior lenders and/or mezzanine lenders), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate or an independent agent taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific funding objectives. Types of loans include term loans, working capital loans, bridge loans, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can vary between:

• a term loan, provided for an agreed period of time;
• a revolving loan or commitment line, provided for an agreed period of time, which may be used multiple times up to the maximum outstanding amount agreed;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a bridge loan intended for use in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can be:

• committed, meaning that the lender is obligated to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion as to whether or not to provide the loan.

In most cases, loans are made available as committed facilities.

Loan repayment

A loan can be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or on a scheduled basis (usually in full at maturity).

Loans can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility). Luxembourg law governed loans can be syndicated but are rare.

Syndicated facilities by their nature involve more parties (such as agents and security agents which fulfil certain roles for the finance parties) are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, asset backed loans, working capital loans, equity bridge facilities, project facilities or letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Repurchase agreements

Repurchase agreements are also used as a financing tool.

Lending can be tailor-made to the requirements of the parties. A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Loan durations 

The duration of a loan can also vary between: 

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin. 

Loan security 

A loan can either be secured, unsecured or guaranteed. 

Loan commitment 

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan. 

Loan repayment 

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Mexico can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities and project or letter of credit facilities.

Loan durations

The duration of a loan can vary between:

• a term loan, provided for an agreed final period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

There is no mandatory lending structure in Morocco, lending can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Loans will be structured to achieve specific objectives, e.g. term loans, working capital loans, equity bridge facilities, project facilities assets financing, etc.

Loan durations

The duration of a loan can vary depending on the parties willingness:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues.

Loan security

A loan can either be secured, unsecured or guaranteed.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or in full on the maturity date.

In acquisition finance transactions, the most common lending structure is one by means of which funds are lent to a parent (holding company) or acquisition company which then uses the proceeds of the funds lent (together with an equity contribution (which can be structured as a debt instrument as well), to acquire the relevant target concerned. Senior/mezzanine structures are not commonplace any more (the most dominant structure is currently a senior only structure). Direct lending and unitranche structures now also play a major part in the lending landscape in the Netherlands. The equity/debt mix is currently around 40/60 to 50/50.

Real estate finance transactions usually entail an opco/propco structure, whereas other forms of financing structure customarily entail lending directly to the relevant borrowing entity.

Loan durations

Senior financing customarily has a duration of five to seven years with mezzanine maturity dates being at least six months longer than the senior financing.

Loan security

Loan documentation usually contains a joint and several liability structure for all obligors. Security extends to receivables, moveable assets, shares, intellectual property and real estate.

Loan commitment

Committed loans are customary in the Netherlands.

Loan repayment

Repayment of loans can take any of a number of forms, the most common being amortizing (for A Facilities) and bullet (for B Facilities). The Loan market for repayment generally follows the Loan Market Association standard.

Lending in New Zealand can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, e.g. term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities etc.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed or limited resource. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Norway can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties, are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one participant in the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable, and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Peru may be structured in a number of different ways to include a variety of features and conditions depending on the commercial needs of the parties.

A loan may either be provided on a bilateral basis (a single lender providing the entire facility) or a syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan may also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid; or
• an overdraft, provided on a short-term basis to solve short-term cash flow issues.

Loan security

A loan may either be secured, unsecured or guaranteed. These conditions depend on the risk profile of the borrower and the total amount to be lent, and the exposure of the effective equity of the lender, among others.

Loan commitment

A loan may also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan may also be repayable on demand, on an amortizing basis (in instalments over the loan life) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Poland can be structured in a number of different ways to include a variety of features, depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or on a syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees that fulfil certain roles for the financing parties), are more highly structured, and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one member of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to the maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can be committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled.

Loan repayment

A loan can be repayable on an amortizing basis (in instalments over the life of the loan), or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Portugal can be structured in several different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfill certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicates taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan also varies between:

• a short-term loan, with a maturity date not exceeding one year;
• a medium-term loan with a maturity date exceeding one year but not exceeding five years; or
• a long-term loan, with a maturity date exceeding five years.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

A breach of a loan commitment will only create a contractual liability by the breaching party, which gives the innocent party the right to call for a contractual remedy or to be indemnified.

Loan repayment

A loan can also be repayable upon demand, on an amortizing basis (in installments during the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Puerto Rico can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties. Puerto Rico is a ‘freedom to contract’ jurisdiction where the parties can agree to any terms to a contract as long as such terms are not against the law and the public policy of the Commonwealth of Puerto Rico (la moral y el orden público).

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, e.g. term loans, bullet loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity). There are regulations regarding prepayment penalty clauses that may be applicable to certain loans (for example, mortgage loans).

Lending in Romania can be structured in a number of different ways, mainly depending on the complexity and the value of the transaction and, generally, the overall commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders, each providing parts of the overall facility).

Syndicated facilities, by their nature, involve more parties (such as agents and security agents which fulfil certain roles for the finance parties), as well as more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicates taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, project loans, acquisition loans, real estate loans or letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can be either secured or unsecured. For more information, see Giving and taking guarantees and security. 

Loan commitment

In practice, a loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan (although in this case there may be certain legal issues to be considered).

A credit agreement in Russia can take the form of a credit facility agreement or a loan agreement. For more information, see Lending and borrowing – restrictions.

A credit facility agreement, being the most common lending instrument in Russia, may be structured in a number of ways to include a variety of features depending on the commercial needs of the parties. A loan agreement is used between individuals or non-credit organizations that only occasionally (not on a regular basis) lend their funds to other parties.

A credit facility agreement is usually provided on a bilateral basis (a single lender providing the entire facility); however, syndicated facility agreements with multiple lenders providing parts of an overall facility are also used on the basis of Federal Law 'On Syndicated Credit (Loan) and Amendments to Certain Legislative Acts of the Russian Federation'. It should be noted that Russian law does not recognize the concept of a trust, thus alternative structures, such as a credit agent (kreditnyj upravlyayushiy), are used in syndicated secured transactions.

Loan durations

There are no particular requirements as to the duration of credit agreements.

Depending on the commercial needs of the parties, the credit agreements may take the form of a term agreement (provided for an agreed period of time), revolving agreement (provided for an agreed period of time with an availability period to extend nearer to maturity of the agreement and which may be redrawn if repaid), etc.

Loan security

A credit agreement can be either secured or unsecured. For more information, see Giving and taking guarantees and security. 

Loan commitment

In the case of a credit facility agreement a lender cannot refuse to provide the loan unless there are circumstances evidencing that the loan will not be repaid in the due time. However, in accordance with the long-standing position of Russian courts, a breach of the respective obligation by a creditor will not give rise to the remedy of specific performance; ie a debtor will not have an enforceable right against the creditor to demand the provision of a loan but will have to resort to the remedies of rescission and damages. It is also possible to formulate conditions precedent for such refusal in the credit facility agreement itself.

A lender under the loan agreement is obliged to provide the loan unless there are circumstances evidencing that the loan will not be repaid in the due time with the exception of cases where a lender is an individual (please see Lending and borrowing – restrictions).

Loan repayment

A credit facility or a loan can be repayable on demand, on an amortizing basis (in installments over the life of the loan) or scheduled (usually meaning the facility or loan is repayable in full at maturity).

Lending structures in Senegal depend on the parties’ projects and needs.

Borrowers can be granted individual loans where one lender provides for the loan or syndicated loans where two or more lenders provide loans to one or more borrowers.

Syndicated loans involve large loans where the different participating banks share the risks as their liability is limited to the amount of their contribution.

Those syndicated loans are very complex transactions requiring the appointment of facility agents. Security agents are also appointed as provided for under Article 5 of the Uniform Act on Securities adopted on December 15, 2010.

Loans structuration depend on different parties’ objectives. They can be commercial loans, concessional loans, non-concessional loans, equity loans, long term loans, short term loans, alternative forms of financing.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for a set period of time that usually lasts between one and ten years but can last a bit longer up to thirty years;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be withdrawn, repaid and redrawn if repaid; it provides for more flexibility and it can be reused as it is repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a bridge loan gives access to short-term loans that allow to meet short-term liquidity gaps or needs.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, refer to, among other texts, the Uniform Act on Securities.

Loan commitment

A loan can also be:

• committed, provides for terms and conditions imposed on the borrower and the lender is obliged to provide the loan if those terms and conditions are fulfilled; or
• uncommitted, meaning that the lender is not committed to provide the loan.

Loan repayment

The funds can be repaid on demand, in instalments, or scheduled to be repayable in full at maturity.

Lending in Singapore can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfill certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but may sometimes come with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in Slovakia can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or a syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents who fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicates taking the lead in coordinating and arranging the financing.

Loans can be structured to achieve specific objectives, e.g. bank overdraft, discount credit, consumer loan, acceptance credit, loan against securities, bridging loan etc.

Loan durations

The loans may be divided on the basis of their duration into:

• short- and medium-term loans, such as discount credits, consumer loans or acceptance credits; and
• long-term loans, such as mortgages, municipal credits or consumer housing loans.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or on a scheduled basis (usually meaning the loan is repayable in full at maturity).

Loans

Other than pursuant to the provisions of the National Credit Act, as contemplated above, there is no prescribed structure for lending transactions and such transactions may be tailored to suit the commercial requirements of the parties.

A loan may be provided on a bilateral basis (a single lender providing the entire facility) or on a syndicated basis (multiple lenders providing portions of the overall facility) to one or multiple borrowers.

Loan durations

The duration of the loan is subject to negotiation between the parties. Generally, the duration of loans varies between:

• bridging loans – short-term loans, normally for up to three to six months (there are generally tighter operational restrictions placed on the borrower and the margin is higher than longer-term loans);
• term loans – provided for an agreed period of time and is made available for a specific purpose (the availability period of such loans ends once the borrower has utilized the loan for the applicable purpose);
• revolving loans – provided for an agreed period of time and may be redrawn if repaid; and
• working capital facilities – made available to the borrower for a period of 365 days and is repayable on demand (these types of loans are ordinarily utilized by the borrower to fund its general working capital requirements and may be redrawn if repaid).

Loan security

Loans may be secured or unsecured. For more information, see Giving and taking guarantees and security. 

Loan commitment

Loans may be committed or uncommitted. It is common, in relation to committed facilities, for the lender to charge a commitment fee for the duration of the availability period of the particular commitment. In order for a loan to qualify as being uncommitted, the provision of that loan must be subject to conditions which are in the lender's discretion (eg credit committee approval).

Loan repayment

Loan repayments vary according the commercial capabilities of the borrower and the purpose for which the transaction was implemented. Repayments vary between:

• capital bullet – the full amount of capital is repaid on the maturity date with interest being paid in arrears on each interest payment date (normally monthly or quarterly);
• equal payments – equal payments comprising capital and interest payable at set intervals during the term of the loan;
• equal capital payments – equal payments of capital plus accrued interest payable at set intervals during the term of the loan;
• sculpted profile – instalments vary according to the borrower's projected income during the term of the loan; and
• on demand – capital is repayable on demand with interest having been paid at set intervals during the term of the loan.

Preference shares

An alternative basis on which to provide financing is by way of subscribing for preference shares in the borrower. The advantage of using this type of funding is that the dividends that a preference shareholder receives (ie akin to the interest it would have received on a loan) is exempt from tax under South African tax legislation. In order to benefit from the exemption on dividends, the provision of finance by way of preference shares does, however, need to comply with the requirements set out in the Income Tax Act as to the purpose of such financing and the security provided for such financing. Failure to comply with the provisions of the Income Tax Act for preference share funding has the consequence that the dividends received on account of the preference shares are deemed to be interest (which is taxable) and, accordingly, the tax benefit of such preference share funding will be lost.

In the event of the insolvency of the borrower, a preference shareholder will rank behind secured creditors of the borrower and ahead of the ordinary shareholders of the borrower.

Lending in Spain can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A financing can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Facilities will be structured to achieve specific objectives, e.g. term loans, revolving credit facilities,working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Within the last years, it has become increasingly popular to finance certain transactions (usually LBOs) through private placements issued by the borrower, which are subscribed by Alternative Capital Providers (instead of usual credit institutions). For more information, see Private placement.

Facility durations

The duration of a facility can also vary between:

• a term loan or credit facility, provided for an agreed period of time but with a short availability period;
• a revolving credit facility, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Facility security

A facility can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Facility repayment

A facility can also be repayable on demand, on an amortizing basis (in instalments over the life of the facility) or scheduled (usually meaning the facility is repayable in full at maturity).

Lending in Sweden can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or a syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, multi-option and revolving facilities and project facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or on a scheduled basis (usually meaning the loan is repayable in full at maturity).

Lending can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

The laws of Thailand do not allow accrued interest to be capitalized to the principal amount unless the interest has been in default for at least one year and compound interest is prohibited. Therefore, the principal amount of a loan is generally structured to be due and payable in full at the maturity date or on demand, while the interest and other payments will generally be due and payable periodically or upon occurrence of certain trigger events. The relevant statutory limitation periods are five years for loan instalment repayments and ten years for scheduled repayments of loans in full at maturity.

Lending may be structured in a number of different ways depending on various factors.

Number of parties

• Bilateral loans (one lender to one or several borrowers)
• Syndicated loans (multiple lenders)

Note that syndicated structures are rarely seen between local banks and borrowers, however, it is quite common for Ukrainian borrowers to structure their borrowings as syndicated deals with foreign lenders outside Ukraine.

Loan security

• Secured loans
• Unsecured loans

Types of facility

• Term loan facility
• Revolving term facility
• Overdraft facility
• Bridging loan

Repayment profiles

• Amortizing payment
• Balloon payment
• Bullet payment

Lending in the UK can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities etc.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security.

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in the UK can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents and trustees which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project facilities and letter of credit facilities etc.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Lending in the UAE can be structured in a number of different ways to include a variety of features depending on the commercial needs of the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility) or syndicated basis (multiple lenders each providing parts of the overall facility).

Syndicated facilities by their nature involve more parties (such as agents which fulfil certain roles for the finance parties), and are more highly structured, involving more complex documentation. Larger financings will typically be done on a 'club' or syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, eg term loans, working capital loans, equity bridge facilities, project, real estate facilities,  trading finance and letter of credit facilities.

Loan durations

The duration of a loan can also vary between:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• an overdraft, provided on a short-term basis to solve short-term cash flow issues; or
• a standby or a bridging loan, intended to be used in exceptional circumstances when other forms of finance are unavailable and often attracting a higher margin.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security. 

Loan commitment

A loan can also be:

• committed, meaning that the lender is obliged to provide the loan if certain conditions are fulfilled; or
• uncommitted, meaning that the lender has discretion whether or not to provide the loan.

Loan repayment

A loan can also be repayable on demand, on an amortizing basis (in instalments over the life of the loan) or scheduled (usually meaning the loan is repayable in full at maturity).

Shari’a and Islamic finance

Islamic banking and finance transactions are based on Islamic principles and jurisprudence (together referred to as Shari’a or Islamic law) which is derived from a number of sources, including the Qu'ran. Islamic finance structures and techniques have developed in accordance with Shari’a principles and these principles must be adhered to when deciding whether a proposed financing structure or product is Islamically acceptable.

The key principles are as follows:

• No interest – Under Shari’a, money is regarded as having no intrinsic value and also no time value. The payment and receipt of interest (riba) is prohibited under Islamic law and any obligation to pay interest is considered to be void. This rule also prevents a financier from charging penalties and/or default interest.
• No uncertainty – Uncertainty (or gharrar), particularly any uncertainty as to one of the fundamental terms of an Islamic contract (such as subject matter, price or delivery), is considered to be void under Shari’a. This principle is fairly broad as it requires certainty on all fundamental terms of a contractual arrangement.
• No speculation – Contracts which involve any speculation are not permissible (haram) and are considered to be void. This does not, however, prevent a degree of commercial speculation which is evident in a lot of commercial transactions. The prohibition applies to forms of speculation which are regarded as gambling. The general test is whether something has been gained by chance.
• Unjust enrichment/exploitation – A contract where one party is regarded as having unjustly gained (at the expense of another) is also void. The principle also extends to the enrichment of one party who exercises undue influence or duress over the other party.
• Investments – The proceeds in Islamic finance should not be used for the purposes of purchasing or investing in products or activities that are prohibited. These prohibited items and activities include the manufacture and/or the sale or distribution of alcohol, tobacco, pork products, music or pornographic productions, the operation of gambling casinos or manufacturers of gambling machines – but also extend to conventional banking and insurance activities, as well as defense and weaponry.

Islamic financiers or investors work closely with Shari’a scholars – Muslim scholars who specialize in providing guidance on the application of Shari’a principles to commercial activities – to make sure that structures and products remain compliant with the rules and principles outlined above. In effect, these scholars have the controlling say in whether or not a particular structure, product or document should be approved. However, it is important to note that Shari’a is not a codified system of law and interpretations of the key principles can vary, particularly between the different ‘schools of thought’ within Islam.

Islamic principles do not prohibit a financier in an Islamic finance transaction from making a profit, rental or other return on its asset or investment. To that end, a number of contemporary structuring techniques (or Islamic contracts) have developed which allow Islamic bankers to structure transactions and products in a way that comply with Islamic principles While also replicating the economics of conventional loans and products. Alternatively, a structure may demonstrate that the financier has assumed some of the commercial risk inherent in an underlying transaction or business venture. Sometimes these structures or approaches can be combined.

Some examples of Shari’a contracts

• Sukuk – These are a type of certificate or note (often called Islamic bonds) which represent a proportionate interest (sometimes also described as a participatory interest) in an underlying asset or investment. They are generally considered to be debt securities (akin to bonds) which, depending on the underlying asset or transaction, can be traded in the secondary market. The Sukuk certificates are often 'layered' on top of an underlying Islamic financing technique which is intended to derive a return from an underlying asset or investment (such as Ijara – see below).
• Ijara – This is Islamic financing's equivalent of leasing and is often described as a hybrid between an operating lease and a finance lease. In general terms, the financier will act as lessor and the borrower entity will act as lessee and will pay rentals to the lessor.
• Murabaha – The financier will buy an asset or a commodity from a supplier and will then on-sell the asset to the customer on deferred payment terms at an agreed marked-up price (cost price plus profit).
• Wakala – This is an agency relationship between an investor or principal (muwakkil) and the agent (wakil).
• Istisna’a – This is essentially a sale contract whereby the seller or manufacturer undertakes to deliver a specific asset according to certain agreed specifications. The price of the asset and the date of delivery are specified at the outset.
• Mudaraba – This is a contractual arrangement between investors (rab al-maal) and a manager (mudareb). The investors typically put up capital which the manager then invests.

Lending in the US can be structured in a number of different ways to include a variety of features depending on the commercial needs of
the parties.

A loan can either be provided on a bilateral basis (a single lender providing the entire facility), a club basis (a small group of multiple lenders each providing parts of the overall facility) or syndicated basis (a larger group of multiple lenders each providing parts of the overall facility).

Loans can be secured or unsecured. Assets of a debtor can have multiple security interests attached thereto and such security interests are usually allocated among secured parties in respect of priority and other similar rights pursuant to an intercreditor agreement. A first-lien/second-lien loan can be combined into one unitranche loan. In this structure, the lenders enter into an agreement among lenders outside of the credit agreement with the borrower.

Club and syndicated facilities by their nature involve more parties (such as agents which fulfil certain roles for the finance parties), are more highly structured and involve more complex documentation. Larger financings will typically be done on a syndicated basis with one of the syndicate taking the lead in coordinating and arranging the financing.

Loans will be structured to achieve specific objectives, e.g. acquisition financing, dividend recapitalizations, working capital loans or letter of credit facilities.

Loan durations

The duration of a loan may include:

• a term loan, provided for an agreed period of time but with a short availability period;
• a revolving loan, provided for an agreed period of time with an availability period that extends nearer to maturity of the loan and which may be redrawn if repaid;
• a swingline loan, provided on a short-term basis to solve short-term cash flow issues; or
• a bridge loan, provided for up to a year and intended to bridge the gap until another financing source is available.

Loan security

A loan can either be secured, unsecured or guaranteed. For more information, see Giving and taking guarantees and security – common types.

Loan commitment

Lenders are obligated to provide the loan if certain conditions are fulfilled.

A credit agreement may also include an uncommitted incremental facility or an accordion, which allow the borrower to increase the commitments of the existing lenders or bring new lenders into the facility. The lenders do not commit upfront to providing additional loans.

Loan repayment

Typically, a term loan is repayable on an amortizing basis (in instalments over the life of the loan) or is repayable in full at maturity. Revolving loans may be reborrowed and repaid throughout the life of the facility.