By definition, the bank grant is the crediting of the net proceeds of a direct IOU. These are paper or financial bills, which do not derive from the sale of goods as in the bank discount.
The net proceeds are credited to the current account and the sum is withdrawn and used in a single payment by check, bank transfer or transfer.
The guarantees can be represented by
– direct I pay with stamp 11 ‰
– Possible endorsement or surety
The cost of the operation is determined by –
discount –
commissions on operations –
stamp duty on bill
Interest is calculated by counting the days from the date of admission to the expiry of the bill plus the day of departure plus bank days.
Compared to the credit line, the bank grant is suitable for operations with a predetermined amount and maturity, as the rate is lower.
However, it is not convenient to have simple liquidity available, as interest is also paid on unused sums.
Compared to the commercial paper discount, the interest rate is higher, because
-The degree of risk of the operation is
higher.Here we have only one promissory note, which is the financed subject, while in the discount there are at least two bills of exchange, i.e. the financed customer obliged by way of recourse and the principal that is the debtor transferred –
Stamp
Here the stamp is charged to the customer who discounts the direct IOU while in the bank discount the stamp is paid by the principal, that is, whoever bought the goods.
Due to the characteristics explained, the bank grant is a type of investment suitable for purchasing factors with a fast cycle of use.
Let’s analyze a case.
Ms. Laura needs a certain amount to finance the purchase of raw materials. Not having the commercial paper (active bills) to be discounted or to be collected, sbf asks his bank for a loan guaranteed by a direct IOU of 10,000 euros. Having examined the additional guarantees given (any endorsements, financial statements, Ms. Laura’s personal assets), the bank makes itself available for this operation under the following conditions: rate 9%, days 60 (in this case the days are given by the financial year. the calculation is the same as that of the bank discount), commissions 15 euros. The promissory note is purchased by the bank and the cost of the stamp duty decreases the net revenue credited.
Stamp Calculations = 10,000 x 11 / 1,000 = 110
Interest = 10,000 x 60 x 9 /36,500 = 147.95
Commissions = 15
Operation cost = 272.95
Net revenue = 9.727.05
Let’s see the detection
If at the due date Mrs. Laura manages to pay off the debt
If, on the other hand, Ms. Laura does not have the necessary liquidity to pay off the debt, she can ask for renewal. Let’s see the case of the total renewal under the same conditions
When the grant is renewed, a new bill must be signed, indicating the new deadline. The bank will buy the bill by charging the stamp duty (110) and will then charge the renewal interest and additional commissions. As regards the bank grant account, we have € 10,000 in debit as the old bill has expired and must be removed from the accounts; then we have 10,000 euros in credit to take over the debt represented by the new signed effect.
