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GLOSSARYTERMS AS A CREDIT DESK USES THEM

Bilateral facility

What is a bilateral facility, and how does it differ from a syndicated loan?

ONE OF 366 TERMS · FREE · NO SIGNUP

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED

// THE SHORT ANSWER

A bilateral facility is a loan agreement between one bank and one borrower group, negotiated directly and usually on the bank's own standard documents. Waivers, amendments and enforcement are that bank's decision alone, which makes it quicker and more flexible than a club or syndicated facility, and the bank relies on its own diligence. A borrower with several bilateral lenders has several separate sets of terms, so covenant definitions, security and maturities can drift apart; larger borrowers often bring them under one set of common terms, or move to a syndicated facility.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

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FACILITIES AND THEIR SHAPE

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