What Are Multilateral And Bilateral Loans?

A Bilateral Loan is a kind of loan that involves a single borrower and a single lender. The lenders are usually banks or any other financial institution.

In contrast a Multilateral Loan is a kind of loan that involves a number of lenders and a single borrower. The lenders are most financial institutions or banks.

Multilateral loans is a common type of loan that is taken country wide. Normally the multilateral loans are funded by agencies such as International Monetary fund (IMF), World Bank, etc.

Simply explained bi- is a prefix to signify that there are 2 parties to an agreement and for multi-, well obviously you're going to have more than 2 who are party to the loan. At the end of the day, it's how many people are going to have a hand in the borrowing and lending of money.