Football Loans Explained: How Loan Deals Work in English Football

In 1893, the English Football League (EFL) introduced the ‘retain-and-transfer’ system which allowed clubs to retain a player’s registration right in the event of a temporary transfer to another club. 1963 saw the reformation of this system after it was declared unjustifiable and unfair. The system was moderated again in 1995 and has remained largely unchanged to the current date.  

A football loan is the temporary transfer of a player from their contracted club to another club for an agreed amount of time. All loans take place within the two designated transfer windows. These rules prevail in the Premier League and the English Football League (EFL). 

Once the loan period has expired, usually at the end of the football season, the player returns to the ‘parent’ club. Occasionally, a permanent transfer is agreed and the player moves to the secondary club on a full-time basis.

Football loans are often aimed at progressing the talent of the player as well as providing the receiving club the chance to strengthen their squad, address injury problems or plug a hole in their finances. 

Loan rules vary from league to league. In the Premier League, clubs may only be able to loan four players and these loans must come from different parent clubs. This rule extends to five players on a single matchday within the EFL. 

In 1893, loans were considerably less formal than today. Football is now a global commodity that reaches all corners of the earth. Football loans are now highly-regulated and strategically planned. When contracts are drawn up the parent club will ‘match’ the player with a club that most meets their needs.

When loans are negotiated the parent club will indicate a set of performance expectations for their player. These are stipulations linked to the development of specific skills, contributing to improved results or meeting a set of performance metrics. These are often linked to the player’s position within the team. 

• The ‘retain-and-transfer’ system was introduced in 1893, forming the foundation of modern loan and transfer rules in English football. (English Football League Historical Records)
• The system was reformed in 1963 after being deemed unfair, and further adjusted in 1995, shaping the modern loan system. (Football Governance History Reports)
• Football loans must take place within two transfer windows per season (summer and January). (Premier League Handbook / FIFA Regulations)
• In the Premier League, clubs can register a maximum of 4 loan players per season from other clubs, with no more than one from the same club. (Premier League Handbook)
• In the EFL, clubs can name a maximum of 5 loan players in a matchday squad. (English Football League Regulations)
• Some loan deals include option-to-buy or obligation-to-buy clauses, allowing permanent transfers after the loan period. (FIFA Transfer System Guidelines)
• Manchester City had 19 players out on loan during the 2023/24 season. (Club Financial Reports / Transfer Data)
• Wages for loan players can be fully paid by the parent club, fully by the loan club, or split between both. (Premier League Handbook)
• Since 2004, Premier League loan players are not allowed to play against their parent club in league matches. (Premier League Rules)
• Players on season-long loans can be recalled in January, but only if a recall clause exists in the contract. (Premier League Handbook)

How Does a Football Loan Work?

The time-frame of this loan is agreed upon by the parent club and the secondary club. At times, a half season is the allocated time-frame, with the intention of reviewing and extending the loan period to a full season if both clubs see fit. Most often, players are loaned out for one season. Loan periods may run past one season but only rarely do they continue for more than two.  

Loans are often negotiated and agreed upon during the preseason but they can also be undertaken during the midseason transfer window. 

For the duration of the loan, the player’s registration rights (clauses within the employment contract that prevents them from being signed by other clubs) are assumed by the club they are on loan to. However, the player’s contract still remains active with their parent club.

When the player being loaned out is a player of high calibre, the temporary club may pay an upfront loan fee to the initial club. The player’s fees may be split between the parent club and the temporary one. Or, they may be paid in full by the initial club or paid in full by the temporary club. 

Some loan contracts include clauses on how much game-time the player will see and others do not hold that same level of detail. These factors are all agreed in negotiations within the loan transfer. 

Loans have become popular within the sport. They benefit the parent club, the players and the temporary club. Vast sums of money are involved in football loans, bringing in significant funds for parent clubs. Teams will often have players loaned out at the same time as they are loaning them in.

The loan system is popular within the Premier League because it allows them to build a young squad who can grow their experience and game time in the lower leagues. In turn, the lower leagues gain from this practice too. They acquire talent that might be out of their financial grasp, without the high price tag.

In 2023/2024 Manchester City had 19 players out on loan, bringing in a welcome revenue stream. Manchester United had 17 players out on loan which saw them generating a healthy cashpot that likely ran into the tens of millions in 2023. These clubs alone show that there is handsome value in loaning out players.

What Is a Loan to Buy?

Loan to buy is a player loan with an option or an obligation to purchase the player at the cessation of the loan. 

When players are on loan with the option to buy transfers, they generally play for the new club for a set amount of time. This is typically, but not always a season. Once this period of time has ended, the temporary club has had enough time to assess and monitor the transferred player and make an informed decision whether to buy them or not. If they do decide to buy, there will be an agreed, predetermined fee established when the contract was drawn up. This option allows clubs to ensure the player is a good fit for their squad and avoid a failed transfer, costing them money.

When the loan to buy has been agreed with an obligation to purchase, the temporary club agrees to buy the player at a set fee and there is no option to give back word. 

‘Mandatory buy options’ or ‘obligation to buy clauses’ can be written into loan contracts. When conditions are met, such as playing for a set number of games or attaining a certain league place, opportunities to buy the player becomes available.

A notable loan to buy deal was the move by Ivan Campo moving from Real Madrid to Bolton, in 2002. Originally, this was a straightforward loan deal. But, the defender impressed the Bolton manager, Sam Allerdice. Allerdice believed he bolstered not just the defence but the squad in general and, after 31 games on loan, Campo was signed permanently. 

In January 2005, Mikel Arteta joined Everton from Real Sociedad. Less than six months later, Everton signed Arteta on a permanent basis. Arteta went on to score 36 goals in 209 appearances and claimed an assist in a further 35. Arteta became a fan favourite and an unofficial leader of the dressing room. 

Robbie Keene moved on loan from Inter Milan to Leeds United in December 2000. Six months and fourteen goals later, Keene was signed permanently. 

Can a Player on Loan Play Against His Old Team?

 In 2004, Lomana Lualua scored an 89th minute goal against his lending club, Newcastle United. This goal evened the score and prevented his home club from securing their Champions League hopes for that season. This led to the reformation of the rules. 

Later that year, Players in the Premier League were prevented from facing their parent club when they met in league clashes.

FA Cup games are not permitted either.  Players can face their parent club in the League Cup although they must receive written consent from them.  

This has led to some notable exclusions from high-stakes games. In 2022, Chelsea prevented their loanee, midfielder, Connor Gallagher from taking part in the FA Cup Semi-final. And, in 2023, Tommy Doyle and James McAtee were left out of the FA Cup Semi-final against their parent team, Manchester City. 

For those players on a loan in the Women’s League the decision is shared between both clubs and the player themselves. In 2024, Kathrine Kuhl, Arsenal player on loan to Everton was banned from competing against her former team in the Women’s Super League (WSL).

Because the ruling by UEFA that stipulates clubs cannot, ‘apply any influence whatsoever over the players that another club may or may not field in a match,’ players are able to play against their lending team in UEFA competitions. 

Can Loan Players Be Recalled?

Transfer windows run between the end of July to the end of August and throughout the month of January. Because the loan transfers take place within the two designated transfer windows in a football season, players on a season long loan can be recalled during the January window. This can only take place if there is a recall clause built into the loan contract. However, a loan can be rescinded at any point in the season if one or both clubs mutually agree. If the parent club wishes to sell the player during the January window, they can be recalled back to the home club. 

There are other reasons for a recall too – a loan is built around the needs of both clubs and those of the player. If the lending club experiences issues with injury within their existing squad a player could be recalled. This is more likely to happen if the player on loan plays in the position where there are gaps. There are also opportunities to recall an injured player if the parent club feels the outcome of rehabilitation will be more favourable under their care. 

If a player is under or over performing they may be recalled. Underperformance might indicate the loan club is not a good fit. And, if a loaned player is playing particularly well, there could be conflict of interest when both teams are close in the league table or due to play one another in a cup game. 

How Many Loans Can a Team Have? (In and Out)

The Premier League have issued strict guidelines on loans within the English Leagues. 

These are:

• The maximum number of loans registrable in the same season is four, and, under no circumstances, shall more than one be from the same club at any one time.
•  Premier League clubs cannot loan to another Premier League club a player they have acquired in the same transfer window.
• A Premier League club may loan not more than one of its goalkeepers to another Premier League club.

Whilst the rules are not entirely the same throughout all leagues, they are similar. Both the Premier League and the EFL have synced their summer transfer dates. 

Championship teams can have an unlimited number of under-21’s on permanent contracts, without the need to register them. However, loaned players, even under the age of 21 need to be registered. This applies to goalkeepers too. 

The rules also stipulate that you can have an unlimited number of loanees in the squad but a maximum of five can be named on the squad list for each game. The rules also state that you can only loan a maximum of four players from one club, and only two of these can be over 23.   

But, whilst both leagues have deadlines for documentation submission, the EFL can extend their deadline for international loan signings until midnight – under FIFA legislation.

Player loans are a key feature of domestic football. They allow the elite clubs to grow their talent and the smaller clubs to boost their squads with quality players. It is a system that works for both the small and mighty clubs and will continue to do so in the future. 

Frequently Asked Questions

How does a football loan work?
A football loan is agreed between two clubs for a set period, often a season. The player temporarily plays for the new club, while still under contract with their parent club. Wages and fees are shared or paid depending on the agreement.

Why do football players get put on loan?
Players are loaned to gain experience, improve development and get regular game time. It also helps clubs strengthen squads, cover injuries or reduce costs while allowing parent clubs to develop their players.

Do players on loan get paid?
Yes. Loan players are still paid under their contract. Wages may be covered fully by the parent club, the loan club, or shared between both, depending on the agreement.

What does it mean when a football is on loan?
It means a player is temporarily transferred to another club for a fixed period. They play for that club during the loan but remain contracted to their original team and usually return when the loan ends.