A loan in which other lenders buy shares from the lender that made it, under a written agreement that keeps the first lender in the loan for its whole life.
NCUA defines a loan participation as a loan in which one or more eligible organizations take part under a written agreement with the originating lender, and the agreement requires the originating lender to stay in the loan throughout its life. Eligible organizations are credit unions, credit union service organizations and certain other financial organizations.
The borrower signs with one lender. The pieces are sold behind that contract, at or after funding. Lenders use participations when a request is larger than one lender’s limit to one borrower, or when a seller needs room under its own caps.
NCUA’s rule for a credit union that buys sets several numbers. The originating lender keeps at least 10 percent of the outstanding balance if it is a federal credit union, and at least 5 percent if it is any other eligible organization. The buyer’s policy caps purchases from one originating lender at the greater of $5,000,000 or 100 percent of its net worth, and purchases tied to one borrower group at 15 percent of net worth. The borrower becomes a member of one of the participating credit unions before the purchase.
Banks buy and sell participations too, under their own regulators’ rules.
How it shows up in the data here
For credit unions the 5300 reports commercial participation interests bought in the first half of 2026 and non-member commercial loans and participations held at June 30, 2026. The participations filter lists credit unions with either figure above zero. The data does not say which lender sold a participation or which loan it came from, and bank call report data here has no comparable buyer field.
Go further
- Credit unions that buy participations: Bought in the first half of 2026 or held at June 30, 2026.
- Loan participations explained: How a participated loan is put together.
- Loan participations, explained: A participation lets one lender make a loan that is too large for it to hold alone. The borrower signs with one lender. Behind that lender, others own pieces of the loan and share its risk.
- How to place a business loan with a credit union: Credit unions make business loans, and some make a lot of them. Three things are different from a bank: the borrower must be a member, most credit unions work under a cap on business loans, and the limit to one borrower is set against net worth.
- A credit union lender's guide to working with brokers: Brokers bring loans a credit union would not otherwise see. Taking them well means four checks before credit: can the borrower join, is there room under the cap, is the loan inside the limit to one borrower, and who pays the broker.
Related terms
- Originating lender: The lender the borrower first contracts with, which then sells participations in the loan to other lenders and stays in the loan itself.
- Participant lender: A lender that buys a share of a loan another lender originated. It takes part of the credit exposure, usually without dealing with the borrower directly.
- Credit union single borrower limit: The most a credit union may lend in commercial loans to one borrower or group of associated borrowers: the greater of 15 percent of its net worth or $100,000.
- Member business loan cap: The legal ceiling on a credit union's member business loans: 1.75 times its net worth, or 1.75 times the net worth a well capitalized credit union must hold, if that is less.
- Loan syndication: Loan syndication is a group of lenders making one loan together under a single credit agreement, with one lender arranging it and acting as agent.
- Loan sale: A lender's transfer of all or part of a loan to another party, so that the buyer, not the lender that made the loan, holds that share of it.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.