In a syndicated loan, multiple banks and non-bank financial institutions lend a proportion of the total amount of the borrower's loan by making separate commitments. An agent bank is appointed by the members of syndicate to interact with the borrower on behalf of the syndicate, receive repaymentsto facilitate borrowings and distribute them in the correct amounts to the lenders, and to administer the loans.  Once a company decides to borrow money, it approaches one bank to be the lead bank and to arrange for the syndicate of lenders to make the loans. . The lead bank performs a due diligence review of the business and financial condition of the borrower and its subsidiaries to determine the terms on which the lenders lend money to the borrower.While negotiating the loan documents, the lead bank begins to acquire commitments from other lenders to make a portion of the loans.

The initial draft of the loan agreement should be consistent with the term sheet, but is then negotiated as the details are expanded on in the documents. For the lead bank to be able to sell the loans to other lenders, the terms of the loan agreement should not vary too much from other bank loan deals that are then in the market for a similarly situated borrower. Once a company decides to borrow money, it approaches one bank to be the lead bank and to arrange for the syndicate of lenders to make the loans. The lead bank performs a due diligence review of the business and financial condition of the borrower and its subsidiaries to determine the terms on which the lenders lend money to the borrower.Apart from the above an approval from its credit committee is required to make the loan. The lead bank instructs its counsel to draft Commitment letter, fee letter and term sheet determining the major terms on which the lenders agree to make the loans and the fees that the borrower will be charged.