Loan against promissory bill
Loan against promissory bill
Possibly in connection with public subsidies and initial suspension of repayment.
Promissory note loans are loans that are issued in return for the issue of a promissory bill. These are usually large long-term loans that are similar to a bond, but are not traded on the stock exchange. The terms of the loan are clearly defined. The term, interest rate and amount are fixed. Repayment can be deferred (suspension of repayment for several years) and therefore results in lower running costs in the start-up phase. These loans are also issued in conjunction with public subsidies.
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Advantages for companies
This type of financing usually means that liquidity is available at very short notice. In many cases, it also results in more favorable transaction costs and often a lower interest rate interest rate than with normal bank financing.
Disadvantages for companies
As a rule, this type of capitalization places very high demands on the borrower's creditworthiness.
In addition, if several promissory note loans have been used, the different terms and binding periods may result in a liquidity problem with a time lag.
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