Credit or a term loan provided by a single lender to a borrower is bilateral financing, as opposed to a multilateral facility.  Most bank lending is bilateral.

Bilateral lending is suitable for those funding requirements that can be met by only one lender.  They are generally smaller than multilateral lending, much less complicated and, thus, less expensive for the borrower.  Large bilaterals are often funded through loan participation (indirect syndication).

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A credit or term loan facility provided to a borrower by more than one lender on uniform terms and conditions using common documentation is multilateral financing.  It is typically provided in order to share the credit and distribution risk of the financing.

Multilateral financing 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.  Multilateral lending is syndicated lending.

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Direct syndication is multilateral financing that is arranged and distributed to more than one lender who establish a contractual relationship with the borrower and commit to provide the financing directly to the borrower on uniform terms and conditions.  Common documentation establishes a direct legal relationship between the borrower and the participating lenders.

Multilateral financing generally allows borrowers to establish new banking relationships.  Like large bilateral loans, the funding of a lender’s commitment in syndicated lending is often provided through loan participation.

Firm-commitment underwriting, best-efforts arrangements and club deals are forms of direct syndication.  Whereas club deals only call for banks to co-underwrite the loan, firm-commitment underwriting and best-effort arrangements also require the involvement of participant lenders.

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.