The loan syndication process is generally structured in three phases. Banks continue to dominate the market, though institutions have become significant players over the last decade. Syndicated loans are heavily dependent on credit quality and institutional investor appetite. Compared to Europe, the balance of power between these groups is different in the U.S. The retail market for syndicated loans is dominated by banks, finance companies, and institutional investors. It is often used in small-business financing. The process allows for large loan amounts while maintaining prudent credit exposure. This allows the lenders to share the risk and the loan amount. Syndication of loans is a type of loan where two or more lenders come together to make a loan for a single borrower. Individual lenders are still involved in the syndicated loan process, but the loans are generally much larger than they would be if they were lending on their own. This structure helps individual lenders provide large loans while limiting their credit exposure. These lenders share the risk and rewards of the loan.
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