Complementary Financing

Complementary Financing

A type of financing in which different lenders agree to fund under similar yet parallel documentation and a pro rata security package.

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Complementary Financing

A loan made by more than one lender that is secured by the same stock or other security. All lenders have a lien on a given security until the loan is paid off. In complementary financing, two or more lenders make two or more loans to a single borrower and secure those loans by a certain security. The amount of the lien on the security is in proportion to the amount of the loan each lender makes. For example, if Lender A loans $60,000 and Lender B loans $40,000 to Borrower C and they both secure their loans with a certain number of shares of Stock D, then, in the event of default, Lender A has the right to 60% of the shares, while Lender B has the right to 40%.