The discount/acquisition loan, which is frequently used by commercial enterprises, is a banking product that is provided to meet the cash needs of the small and medium-sized enterprises, especially for the overdue bills.
Small and medium-sized enterprises always need cash to continue their operations effectively. Sometimes businesses may prefer high-risk factors such as promissory notes and checks against the sale of their goods and services. In checks and promissory notes, risks such as unrequited documents, having to wait for the due date, loss/theft of documents are the situations that business owners will not want to encounter. In order to avoid these situations and to meet the cash requirement against the overdue notes, discount/participation credit can be used.
What is the Difference Between Discount and Deduction Loan?
Although the discount/subsidiary loan serves the same situation;
- Discount credit is given if the bonds that are not due yet are at the municipal borders where the payment places are located.
- The loan is the type of loan in which the payment places of the bonds that are not due yet are outside the municipality.
Fees and Expenses Received by Banks
- Banks apply interest rates depending on the maturity of the deed and the amount of the prepayment amount and add commissions when necessary. At the same time, the interest rates applied when the discount/acquisition loan is taken are much lower than the interest rates applied in other loan types.
- Commercial firms should also be aware that legal cuts such as NBSB and KKB will be covered by the amount on the deed when they wish to use discount/participation credit.
- After the interest, commission and tax deductions, the remainder of the said note is paid to the entity. In spite of such deductions, discount/utility credit is often preferred by enterprises.
The holders of the notes shall be held responsible for the payments that are not made until the stated maturity period after the discount/acquisition loan is received against the deed and all legal transactions are carried out by the bank.
Discount/bidding loan is a very advantageous application for commercial companies
Commonly used bonds in the commercial field interrupt the cash needs of the firm and cause some kind of loss to the firm. However, in the case of discount/participation credit, the banks make the necessary deductions and pay the company’s receivables on the notes, thus meeting the cash needs.