Which financing option requires a borrower to pay a share of a property's income?

A participation loan is a unique financing option where the lender receives not only interest on the loan but also a share of the property's income or cash flow. This arrangement aligns the interests of both the borrower and the lender, as the lender has a direct incentive to ensure the property generates income. The structure of a participation loan allows borrowers to access capital more easily, particularly in situations where traditional financing may not suffice, thereby providing flexibility to property owners.

Conventional loans, fixed-rate loans, and alternate loans do not typically involve sharing the income generated by the property. They generally focus on the repayment of the principal and interest without any additional income-based involvement, making participation loans distinct for those looking at the income from properties as financial leverage.