An intermediate financing instrument between equity (participation in equity) and long-term loans. Participative loans are loans in which it is stipulated that the lender-financier, in addition to ordinary remuneration through interest, obtains remuneration dependent on the profits obtained by the borrower-financed. A loan in finance is a contract in which one party delivers to the other money or another fungible thing, with the condition of returning the same amount of the same kind and quality. It allows the express agreement to pay interest, in which case they will accrue on the principal granted. It differs from credit in that it is a fixed and determinate amount. Apart from the participative loan, there are many other types of loans, such as commercial loans, consumer loans, and bridge loans, among others. A commercial loan is a short- or medium-term loan to finance working capital needs. A bridge loan is a short-term loan designed to bridge the gap between two longer-term financing loans until the necessary financing is obtained. A consumer loan is a banking product that allows individuals to obtain money as a loan in exchange for repayment with interest through agreed-upon installments. They are used to finance expenses such as vacations, home appliances, vehicle purchases, home renovations, studies, and other expenses. The financial institution offering the loan does not require a real guarantee for its recovery.
« Back to Glossary IndexParticipative loan
« Back to Glossary Index