Bilateral loans are funds provided to a borrower by one lender. The opposite of syndicated loans, bilateral loans are a less complicated type of participatory loan. However, because bilateral loans are agreements between one lender and one borrower, the lender risk is much higher than with syndicated loans.

The primary obstacle associated with bilateral loans is that other business partners, not named in the bilateral loan agreement, aren't restricted from obtaining additional loans. This type of loan is a popular vehicle used to finance offshore trading activities. Consider the following tips to determine if bilateral loans are the right choice for your business.

1. Evaluate expenses associated with bilateral loans.

2. Determine if a bilateral loan could benefit your business.

3. Find a bilateral loans provider that meets your business goals.

Action Steps
The best contacts and resources to help you get it done

Review thoroughly the bilateral loans list of fees and expenses

As with many other loan types, there are often upfront, underwriting, administration and other fees, interest and additional expenses associated with processing bilateral loans. Be sure you clearly understand all associated fees and have budgeted for such fees before agreeing to the loan contract.

I recommend: Check out a range of capital raising loans offered by Wells Fargo. You can find bilateral loans information on the JPMorgan Chase website. This bank also offers customized bilateral agency-backed financing and other financing vehicles to help business owners finance daily operations, purchase equipment or participate in other business transactions.

Seek legal advice for assistance with negotiating bilateral loans

Bilateral loans are structured to primarily benefit the lender and meet the financial needs of the borrower. They can be structured in various ways such as fixed-rate term loans, revolving loans and lines of credit. Consulting with an attorney can help you in negotiating the terms of bilateral loans and ensuring that your interests as a borrower are protected.

I recommend: Greenberg Traurig has extensive experience in advising financial institutions on bilateral loan agreements. Dykema Gossett attorneys also represent financial institutions on bilateral loans.

Borrow from a bilateral loans provider

Similar to other loan types, the risk associated with bilateral loans falls on the lender. To lessen the impact in the event the borrower defaults on the loan, these loans generally have higher interest rates and other fees. The lender will also conduct an extensive credit worthiness review of the borrower.

I recommend: Wachovia offers a range of commercial loans for single business borrowers, including lines of credit. American Trade & Finance offers various bilateral loans and financing solutions in support of bilateral trade between the United States and other countries.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  A primary difference between syndicated and bilateral loans is that businesses can, in most cases, raise the same amount of capital at a lower cost with syndicated loans.