Soft loan

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A soft loan is a loan with a below-market rate of interest. This is also known as soft financing. Sometimes soft loans provide other concessions to borrowers, such as long repayment periods or interest holidays. Soft loans are usually provided by governments to projects they think are worthwhile. The World Bank and other development institutions provide soft loans to developing countries.

An example of a soft loan is China's Export-Import Bank, who recently gave a $2 billion soft loan to Angola to help build infrastructure. In return, the Angolan government gave China a stake in oil exploration off the coast.


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