The borrower usually discounts the acceptance immediately from the acceptance bank. the surety taker immediately to the guaranteeing bank. Expiration of the reason for granting a guarantee, the creditor returns the guarantee certificate immediately! What is an acceptance loan and how does it work? Immediately request payment if the borrower meets his obligations.
Acceptance Loan – Possibility, Interest Rates & Conditions
The Acceptance Loan is a special loan and is primarily concluded between a financial institution and its corporate clients. Acceptance credit is the term used when a financial institution accepts a bill issued by a debtor. The acceptance credit is therefore an exchange credit in which a loan is granted because the deposit has been issued and accepted, but no money is lent.
This change is also called a draft. The acceptance credit is a short-term loan with a maximum term of three months. The name of the loan comes from the Latin term “accipere”, which means acceptance or acceptance. The acceptance loan is also one of the shortest instant loans without consideration. The private discount was usually a special form of acceptance credits.
As private discount the business encyclopedia designates a Tratte with an discounted by the privatization AG assumption (bank acceptance). In this loan transaction, the house bank accepts a switch from its debtor. In this case, Lite Lender is prepared to pay the contract on the due date, regardless of the solvency of the client, and is thus fully liable for the bill of exchange.
The exchange issuer, ie the primary borrower, can hand over bank acceptance or discount at the acceptance bank or another house bank or debit or redeem the bill of exchange. Otherwise, Lite Lender pays the bill of exchange amount on the due date to the bill holder. Although the Acceptance Bank is primarily responsible under the Exchange Law, the Acceptance Loan is only an economic liability, as the Borrower is required under the Credit Agreements to provide the Borrower with the equivalent of Bank Acceptance no later than the day before the Term. The borrower is not eligible.
In the case of an acceptance loan, the credit company sends its good and proven solvency to the counter. In the case of an acceptance loan, therefore, the funds of the house bank are not used, but the house bank only makes its credibility and reputation available. Therefore, an acceptance loan is not recognized in the balance sheet because it is recognized as a contingent liability.
If the bill of exchange is not redeemed in time, the current account of the principal is debited. If this is not possible – which is very unusual – the principal bank acts as joint debtor to the lender. Acceptance credit can be presented as follows: However, it will not be able to resell this product to its own customers on a four-week basis.
Therefore, the company signs a deposit of USD 200,000 with its principal bank with a notice period of four weeks. She accepts the contract and charges the client an agency fee of 1,200 USD for its provision. After paying the 200,000 USD, the company gives the change to its upstream supplier.
At the end of the four-week period, the client contacts the house bank, which in turn demands the amount owed from its corporate customer. Especially in foreign trade, the acceptance loan is of great appeal. Because the client is not obliged to pay for the goods immediately, the client gives the contractor a certain security over the agreed payment term.
Thus, the payment of the amount due to the contractor is ensured in any case. The acceptance of a house bank is better classified as the change signatures of a not yet or not so well informed foreign debtor. This special type of acceptance credit, which is based on the cross-border movement of goods, is classified as a reimbursement credit under the Business Dictionary.
The acceptance credit is predominantly used for large but short-term transactions in which the due date of the payment corresponds to the term of the bank acceptance. Subsequently, the contract is canceled from the sales proceeds of the goods to be financed. The granting of an acceptance loan by the Bank is an important indication for the provider of the credibility of the client (or the company) and thus represents a good basis for long-term cooperation.
However, an acceptance loan can be used not only in foreign trade but also in domestic trade. The reason for this is that the acceptance credit is an effective payment instrument for fulfilling obligations. This is especially important for suppliers in the exchange of goods. Acceptance credit is an advantageous credit to the payee and a secured and high quality payment tool to the beneficiary.
For example, the debtor may hand over the assumed exchange rate to one of its creditors to fulfill its own obligations. In addition, an acceptance credit is often used as a bill of exchange to raise money. A prerequisite for the accepting house bank is usually that the discount is discounted at the house bank, so that the house bank also receives the discount.
This loan is often cheaper for the consumer than another. As a rule, an acceptance or discount credit is only awarded to first-class customers whose solvency is ensured. Only companies whose liquidity and payment ethics are undisputed are admitted. Acceptance credits are processed in accordance with the principles and regulations of the bill of exchange system and are therefore legally validated.
Of course, there are also the additional costs associated with an acceptance credit. They consist of the acceptance fee, the processing fees and, if discounting is possible, the discount. The acceptance amount is usually 2-3% pa and processing costs of about 0.5 – 0.75%. The discounting is usually 1-3% and depends on different influencing factors such as the size of the item, the competitive situation and the business relationship between the client and the house bank.
An acceptance credit for the principal bank is above all an additional income by the acceptance commission without the use of own funds. The advantage of an acceptance loan is usually in the advantageous financing options, the great adaptability and the rapid procurement of capital.