soft loan

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Soft Loan

A loan made at no interest or at a below market interest rate. Soft loans usually refer to loans made to developing countries and others in need of financing, but without the ability to borrow at the market rate. Soft loans may also have a longer grace period or a different amortization schedule that makes repayment easier. This is also called soft financing.

soft loan

a LOAN that bears an INTEREST RATE charge which is much lower than the market rate of interest for such loans. Soft loans are made available by the government to encourage investment in particular types of industrial activity or in particular regions, and by international organizations such as the INTERNATIONAL MONETARY FUND and WORLD BANK to help countries with balance-of-payments difficulties, provide economic aid and to assist industrial development. See INDUSTRIAL POLICY, REGIONAL POLICY.

soft loan

a LOAN that bears an INTEREST RATE charge substantially below that of the interest rate that is charged normally on a loan for a similar purpose and risk status.

Soft loans are often given as a form of ECONOMIC AID to DEVELOPING COUNTRIES by developed countries and international institutions (see WORLD BANK) and are used as a form of EXPORT SUBSIDY. In addition, soft loans may be used to influence industrial location under a country's REGIONAL POLICY.

References in periodicals archive ?
7% of all soft financing, Asian Development Bank -- 26%, Japan Bank for International Cooperation -- 13.
Qatar will probably be providing some soft financing to Bahrain" to help cover its share of the cost of the project, Ali said.
Based on industry trends, it seems that the weakness of the market caused by soft financing markets for biotechnology companies and budget cuts by pharmaceutical companies has bottomed out at the end of 2003.
In 2001, the IDB approved US$158 million in soft financing for the country in the areas of judiciary modernization, integrated child care, surface transportation, pension reform, forestry, municipal development, and pension reform.
Official Development Assistance is a valuable source of relatively soft financing for African states and private entrepreneurs.
Historically, even AECL reactor sales to overseas clients have been underwritten by soft financing and Canadian government loans to the purchaser, notes Ron Finch in his book Exporting Danger.
The meeting, which was attended by His Royal Highness Crown Prince Al Hussein bin Abdullah II, also dealt with the impact of the crisis on Jordan as well as means to provide aid, grants and soft financing tools to the Kingdom.
He called on international donors and UN organizations to find novel channels for soft financing to countries affected by regional crises such as Jordan.