How do Loans Work in Soccer?

You’ve probably heard of businesses requesting for loans from banks, which involves an agreed sum of money being handed over to the former with a scheduled period of repayment and possible rate of interest on top.

That’s easy enough to grasp.

However, when it comes to the world of sport, a loan takes on an entirely different meaning.

In soccer, a loan is when a player receives permission from their parent club to temporarily play for a team other than the one in which they are currently contracted to. The club which receives the loaned player does not pay a transfer fee for the player’s services and, instead, they are usually only obligated to cover the wages of the player for the entire duration of the loan spell.

In a nutshell, that’s the gist of how a loan in football works.

But I’m going to talk about this subject in more detail, starting with the specific loan rules that are in effect within the game.


Football loan rules

As with any method of boosting performance in competitive sports, there are certain rules and regulations which need to be in place to ensure that fairness and equity exist in equal measure.

One of the last things that football fans would want is a competition that is heavily skewed towards the biggest clubs when it comes to the probability of winning.

Loan rules are therefore implemented…

Here are some of the most common loan rules that you’ll find in football:


1. Being cup-tied

how do loans work in soccer - being cup tied

In the Premier League, players who are on loan at another club within the division are forbidden from playing against their parent club.

When a player is bound to meet these conditions, they are said to be cup-tied and are not supposed to be selected for participation.

You can imagine the hilarity as well as the fan anger that would ensue if a player that a club gladly loaned out to an opposition team went on to score against them or make a significant contribution to the parent club’s defeat.

This is why this rule is in place, as it stops the loaning clubs from being at a potential disadvantage in situations like this.

On the flip side, there are some exceptions…


Can a loan player participate against their parent club in the Champions League?

Yes, a loan player can play against their parent club under UEFA’s rules.

This is provided that the host club has applied for and received the express permission of the parent club permitting the player on loan to be used against them.

In fact, there have been quite a few instances of players performing against the clubs they were loaned from.

A great example was when Phillipe Coutinho – was contracted to Barcelona – ended up scoring two goals and providing an assist for Bayern Munich against the Spanish side during an 8-2 Champions League quarter-final thrashing which took place in the 2019/2020 season.


2. Loan business timeframe

In a normal transfer window – which usually takes place in January and the summer months – clubs have to respect the deadlines that are set in stone and must conclude any transfer business before the final day.

However, when it comes to loans, such business can be conducted after each transfer window shuts, which means that clubs are free to sign players on loan throughout the entire year.


3. Registration limits

how do loans work in soccer - registration limits

The Premier League recently decided to impose further loan limitations which you can read about in their 2020/2021 Handbook.

Some of them include:

  • The inability to register more than two players on loan at any one time
  • A maximum of four loan registrations for each Premier League team, with no more than one player coming from the same parent club

So, you can see that they’ve decided to tighten up how many players can be loaned and registered, as the larger clubs could previously exploit this area of the market owing to their massive wage structures which can accommodate for several top loanees at once.


Who pays a loan player’s wages?

I have already alluded to this in the paragraph above, but I’ll make it clear.

The player’s salary is usually paid for by the club to whom he or she is loaned to. This means that the parent club doesn’t take care of the wages of the loaned player until the loan agreement between themselves and the opposition club has expired.

Although there are some exceptions, like Tottenham’s loan deal for Gareth Bale which saw the London side only pay part of the wage packet.


Closing thoughts

Loans have become instrumental in the game today, as their buy now and pay later structure has allowed teams to comply with Financial Fair Play regulations.

The need to make money has seen some sides use loans as a way of generating income by reducing their financial exposure on players.

Since players out on loan have their wages paid by the other teams, the parent club lowers its salary liability all whilst the value of their contracted players matures due to them receiving greater amounts of game time and experience.


A loan in soccer sees a player temporarily move from their parent club to the side requesting the switch. The player in question represents the loan team and receives his or her wages from them for a specified duration of time, prior to returning to the parent club which they contractually belong to.

Samuel Waihenya
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