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What are acceptance loans?

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Quick Answer

Acceptance loans and banker's acceptance, or BA, also called bank bills, are business-to-business short-term notes similar to post-dated checks that are guaranteed by a commercial bank. Acceptance loans or bank bills have a maturity of about 30 to 180 days and are paid on that date, according to Investopedia.

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Full Answer

With the use of acceptance loans, a buyer can purchase goods by providing a seller with a bank bill, who then gives the bill to the bank. Before the note matures, the banker's acceptance can be sold to a third party for the face value minus a discount, or the BA rate. In so doing, the seller can receive his money faster, and the third party can earn in a way similar to a money market account, explains Financial Times.

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