Tandem loans can be defined as a process of taking two loans on a single asset. The asset is usually a house and the second loan is added as an offset loan to the primary loan. Tandem loans are not only taken at individual levels as businesses and other corporate entities also go for tandem loans. This kind of loan can be termed as lending facility that helps a business entity to bridge the gap between a commercial loan and other kinds of funding facilities. The tandem loan that is acquired by a business entity can be used as a working capital, acquisition of the target companies, acquiring land and purchasing other equipments.
Tandem loan can be used as a tool for monetary assistance for the non profitable companies and other corporations such as builders etc. A specific type of tandem loan can be the loan sanctioned by a House Building Finance Corporation that is available for financing housing loans to the families and come under the single family loan. Tandem loan is sometimes confused with another term that is called tandem plan that is actually a mortgage purchase plan program that involves Fannie Mae and Genie Mae.