B Loan Structure -When an IFC loan includes financing from the market through the B Loan structure, IFC retains a portion of the loan for its own account (the "A Loan"), and sells participations in the remaining portion to participants (the "B Loan"). The borrower signs a single Loan Agreement with IFC, and IFC signs a Participation Agreement with the participants. IFC is the sole contractual lender for the borrower. While IFC is the lender of record, the participants' involvement is known to the borrower, and is included in any transaction and publicity.
The A/B Loan structure allows participants to fully benefit from IFC's status as a multilateral development institution. All payments including principal, interest, and fees gain the advantages of IFC's Preferred Creditor Status. IFC commits to the participants to allocate payments pro-rata between the A and B Loan. As a result, IFC cannot be paid in full until all participants are paid in full. Similarly, a default to a participant would be a default to IFC.
Below is an overview of the advantages of the B Loan structure for IFC, Borrowers, and Participants.