Syndication
Loan syndication is when several lenders or investors each fund a share of one loan. A lead lender usually arranges the deal, closes the loan, documents each share and often services the loan for the group.
How syndication works
In private real estate lending, syndication usually means one loan funded by a group instead of a single source. The lead lender sources the borrower, underwrites the deal and closes the loan. The other funders commit to a share of the balance, either by funding at closing or by buying a participation afterwards. A participation agreement sets out each party’s share of principal and interest, who services the loan, and who makes decisions if the borrower asks for an extension or defaults.
The word is used loosely. Some lenders call any loan with more than one investor “syndicated”; others use it only for deals where several institutions sign the loan documents. In most private-lending syndications, the borrower deals with one lender, and the investors’ rights sit in a separate agreement with that lender.
Why it matters to a private lender
Syndication lets a lender close a loan larger than its own capital allows and earn on the full loan through points, servicing and spread. The trade-off is complexity: several investors to report to, shared decisions on modifications, and questions about whether selling fractional interests to individuals raises securities issues, which is a question for counsel.
Example
Hypothetical. A lender closes a $3,000,000 bridge loan, keeps $500,000 and places the remaining $2,500,000 with three investors under a participation agreement. It services the loan and remits each investor’s share every month.
The alternative is one capital partner funding the whole loan, which loan participations explained compares in detail.
Lender Capital handles whole loans only, never participations: one capital partner buys the entire loan, settled through an escrow agent, and Lender Capital never lends or buys loans with its own money. To sell a whole loan you already funded, see sell your loans.
Where Lender Capital fits
Lender Capital places first-lien, business-purpose real estate loans with capital partners. You apply once, then submit each loan with the full file. We send it only to capital partners whose criteria it fits, one partner funds the whole loan at closing and it is assigned to them. You keep your points (less the placement fee), earn the spread above the partner’s rate and service the loan. You pay a placement fee only when a loan funds.
Lender Capital is a business-to-business platform. This page is general information, not legal, tax or securities advice. Terms of warehouse lines and other funding sources vary by provider; confirm them with each provider and your counsel.