Participation loan is a loan in which the lender receives a percentage of the sales, gross income, or noi from a property
Loans offered to a single borrower by several lenders are known as participation loans. One very big loan, for instance, might be funded by several banks, with one of the banks serving as the "lead bank." The lending institution then enlists additional banks to join in and split the risks and rewards.
The participation loan is often originated by the lead bank, which also organizes and oversees the participation and interacts directly with the borrower. In a similar way, credit unions are also eligible to participate in loans.
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