A syndicated loan is a large loan from multiple banks to a single borrower — structured under one unified loan agreement. When a company needs $500 million and no single bank wants to take on that much risk alone, a group of banks form a syndicate to share the lending.
The lead arranger (or bookrunner) — usually a major investment bank — structures the deal, sets terms, and invites other banks to participate. Each bank in the syndicate commits to a portion: Bank A takes $150 million, Bank B takes $100 million, and so on. The borrower deals with one set of terms.
The global syndicated loan market exceeds $5 trillion annually. Syndicated loans fund major acquisitions, infrastructure projects, and corporate expansions. They are especially common in leveraged buyouts (LBOs) where private equity firms acquire companies using significant borrowed capital.