Sometimes companies have to seek conventional and non-conventional means to raise finances. A group of lenders can come together to provide loan to a company. Debt syndication can include private companies, a corporation or a specific project which needs a very large amount of funding. The lenders could receive returns on the loans provided by them by way of interest on a fixed or floating rate basis.
A debt provided under the system of debt syndication could be given as a one-time loan or it could involve predefined instalments of credit infused into a big project from time to time. This system is more security because the risk is spread amongst multiple lenders.
A lead lender is at the core of a debt syndication process. This lead lender is generally a big bank or financial institution which underwrites the loan, providing the first and most often - a big part of the debt fund. This provides other lenders a level of confidence and comfort to enter the debt deal. They can participate in the debt funding process on pre-decided terms. They could be lending one or more instalments at the beginning, mid-project level or at later stage of the project. This allows the lenders, a freedom to participate for the entire or a specific part of project funding. The lead lender also known as the arranger or the agent can also take care of other responsibilities, like administration task or disbursement of cash amongst other syndicate members.
Chartered Finance Management Limited (CFML) based in Mumbai has the expertise in assisting with debt syndication funding for companies or projects that need a huge amount of funds.