A bilateral loan is a one-on-one lending arrangement between a single bank and a single borrower. No syndicate, no group of lenders — just one bank providing the entire loan amount directly to the borrower.
For example, if a company needs $10 million and approaches just one bank that agrees to lend the full amount, that is a bilateral loan. The terms — interest rate, repayment schedule, covenants — are negotiated directly between the two parties.
Bilateral loans are simpler and faster to arrange than syndicated loans (where multiple banks share the lending). However, they concentrate all the credit risk with one bank. For large amounts (say, $500 million+), banks typically prefer syndication to spread the risk. Bilateral loans work best for smaller, relationship-driven deals.