Benchmark Lending is about short term borrowing - often overnight to cover cash shortfalls - almost like a corporate payday loans kind of thing.
Corporates like banks often find they have a cash shortage overnight and they will borrow money from another bank or the federal reserve. This kind of loan is referred to as benchmark lending.
The Federal Reserve sets the benchmark lending rate in the US. Banks use this option of benchmark lending frequently but they are not the only corporate businesses who experience short term cash shortages.
All manner of large corporate companies face cash shortages from time to time and they also use this option for finding money. They may also make an arrangement to borrow short term from a bank but they can also go outside the banking system for short term loans.
Even individuals can take advantage of short term loans and the interest they pay could be measured by benchmark lending criteria.
There are financial brokers who specialize in Benchmark Lending.
