Jurisdiction(s):
United Kingdom

Key definition

Loans definition

What does Loans mean? Loans are agreements to advance money on terms of repayment, usually with interest. In pensions practice, this covers any arrangement where occupational pension scheme assets are lent. In Great Britain, legislation defines “employer-related investments” and strictly restricts them: section 40 of the Pensions Act 1995 (mirrored in Northern Ireland legislation) and the Occupational Pension Schemes (Investment) Regulations 2005 prohibit loans to the sponsoring employer or to persons connected with, or associated with, the employer, and ban giving guarantees or security for the employer’s obligations. Other employer-related investments (such as employer shares or securities) are subject to a...

Bilateral, Syndicated and Club Loans in the UK: Key Features, LMA Documentation, Syndicate Governance and Borrower Considerations

Published by a LexisNexis Banking & Finance expert

Practice notes

One important way to classify Loans is by how many lenders are involved. A facility with a single lender is a ‘Bilateral loan’. Where more than one lender participates, it may be a ‘syndicated loan’ or a ‘Club loan’. Multiple lenders can also participate indirectly through Sub-participation. This Practice Note sets out the key features of bilateral loans, syndicated loans and club loans.

Bilateral loans

A bilateral loan involves just one lender. There may be a sole borrower or several obligors, that is, the borrower plus other group companies acting as guarantors and/or providing security. Such loans are commonly used for relatively small amounts and for simpler financing needs, for example a straightforward overdraft or a term loan. If a borrower seeks a larger sum, a single lender may be unable or unwilling to advance the full amount. In that situation, a syndicated or club loan may be more suitable.

Syndicated loans

A syndicated loan is one in which two or more lenders (often many more) work together to provide funding to a...

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Web page updated on 21/05/2026

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