What Is Bilateral Debt?

LuminaStock/iStock/Getty Images

In a business context, a bilateral debt is a simple loan arrangement between a single borrower and a single lender. Such loans are called "bilateral" because there are only two parties to the loan, each with an obligation to the other: One will provide a specific amount of money under the terms of the loan agreement, and the other will repay the money as provided for in that same agreement.

Bilateral vs. Syndicated

The term bilateral debt doesn't get used much, because people just call it "debt." Most personal and business debt is bilateral debt: You borrow money from one party, and you repay only one party. The alternative to bilateral debt is syndicated debt, in which money is provided by a group of lenders, and the borrower has separate obligations to each lender. Syndicated loans are usually arranged by corporations borrowing money for big projects.


About the Author

Cam Merritt is a writer and editor specializing in business, personal finance and home design. He has contributed to USA Today, The Des Moines Register and Better Homes and Gardens"publications. Merritt has a journalism degree from Drake University and is pursuing an MBA from the University of Iowa.

Photo Credits

  • LuminaStock/iStock/Getty Images