Most lending is bilateral.  Credit or a term loan provided by a single lender to a borrower is bilateral financing, as opposed to a multilateral facility.  Bilateral facilities are suitable for those funding requirements that can be met by only one lender.  They are generally smaller than multilateral facilities, much less complicated and, thus, less expensive for the borrower.  Large bilateral loans are often funded by lenders through loan participation.

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A credit or term loan facility provided by more than one lender on uniform terms and conditions, using common documentation, is multilateral financing.  Multilateral financing is typically provided in order to share the credit and distribution risk of the financing.  It is used by large nonbank corporations, financial institutions and government entities when the required amount of funding is beyond the capabilities any one of the borrower’s relationship banks.

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Multilateral funding is commonly achieved through syndication.  This generally allows borrowers to establish new banking relationships.  Also, funding through the syndication of a loan is frequently provided to a lender through loan participation, in order to fund that lender’s financing to the borrower.

For domestic bilateral lending, typically lender in-house documentation is used.  For cross-border bilateral and syndicated lending, standardized documentation is commonly used, except in the Americas.