IFC created the B Loan structure in 1959 to allow private banks to participate in our loans to emerging market borrowers. Today, the B Loan structure enables commercial banks, investment funds, and other private investors to access direct impact lending opportunities in more than 60 countries while enjoying the same preferential status as IFC’s own loans.
The B Loan is now a market standard for development institutions to mobilize the private sector and is responsible for billions of dollars of annual investment flows into developing countries.
How It Works
When an IFC loan includes financing 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 eligible private lenders (the "B Loan"). The borrower signs a single loan agreement with IFC, and IFC signs a participation agreement with each lender.
Benefits to Lenders
- Recognition of IFC’s risk mitigation role by regulators, ratings agencies, Basel II and III, and private insurance providers
- Increased deal flow through IFC’s global origination capacity
- Access to IFC’s impact lending experience and structuring and restructuring skills
- Investments delivered in line with IFC Operating Principles for Impact Measurement and Performance Standards
- Lender participation is known to the borrower and included in any transaction publicity
- Borrower payments allocated pro-rata between IFC and participant
Benefits to Borrowers
- Enables loans with longer tenors & no withholding tax
- Time and cost savings as IFC remains sole contractual lender and Lender of Record
- IFC arranges participations by other partners and delivers a complete financial package
- Introductions to new banking relationships via IFC’s global network
- IFC’s “stamp of approval” and environmental and social leadership