loan participation note (LPN)

Definition

The type of fixed-income security that allows investors to purchase parts of loans or loan packages that are still unpaid. Security holders collect interest on a pro rata basis. An LPN is typically a short-term investment offer, and financial institutions often create loan participation with small businesses.

Use this term in a sentence

We got a loan participation note and I was really happy because we needed it and it helped our company a lot.

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The loan participation note was a great way for the investor to be a part of the debt economy that is so grand.

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You may want to try and invest in a loan participation note if you are sure that the other party will pay it back soon.

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