If a lender receives 2% of all gross income from a property, what type of loan is this an example of?

A participation loan is characterized by the lender receiving a share of the income or profits generated by the property, rather than just the interest on the loan. In this case, since the lender receives 2% of all gross income from the property, it embodies the essence of a participation loan, which allows the lender to benefit directly from the performance of the property.

Participation loans are often utilized in real estate investments, particularly when the lender is interested in the potential upside of the investment, aligning their financial interest with that of the property owner. This type of agreement can be advantageous for borrowers who may receive more favorable terms in exchange for sharing a portion of their income.

On the other hand, a package loan typically covers both real estate and personal property together, while subrogation and subordination loans deal with legal rights and lien positions and do not involve profit sharing from property income. This further clarifies why the correct answer is related to the benefits derived from the income of the property, making the participation loan the most fitting choice in this scenario.