Types of lending

Types of lending

This overview is a guide to the Banking & Finance content within the Types of lending subtopic, with links to appropriate materials

Introductory guide to lending

Practice Note: Introductory guide to lending provides introductory information on lending transactions. It discusses the different types of loan transaction and provides an overview of the structure of a typical loan transaction, before discussing the documentation involved in loan transactions and security, quasi-security and intercreditor issues. It outlines some key legal issues that can arise on lending transactions before providing an overview of specialist finance transactions, including project finance, real estate finance, acquisition finance and asset finance.

Overdrafts, term loans and revolving credit facilities

Three common types of loan facility are:

•
overdrafts
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term loans, and
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revolving credit facilities (RCFs)

An overdraft is the most common form of bank lending and is used to help solve short-term, day-to-day cash flow issues. As such, an overdraft facility is sometimes referred to as a 'working capital facility'.

A term loan enables the borrower to borrow sums for a specified period of time, known as the 'term'. The

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