What's the difference between discounting bills and issuing loans?

Discounting bills and issuing loans are both businesses that banks finance customers, and there are great differences between them. So what's the difference between discounting bills and issuing loans?

The difference between bill discount and loan issuance

1, with different liquidity.

Due to the liquidity of the bill, the holder can discount it in a bank or discount company in exchange for funds. However, the loan has a time limit and cannot be recovered before it expires.

2. Different interest charges

In the discount business, the interest is deducted from the bill denomination when the business occurs, and the interest is deducted in advance. The loan will bear interest afterwards, and it can be recovered together with the principal at maturity, or it will bear interest regularly according to the contract.

3. The use of funds is different.

After the bill is discounted, the holder has the complete right to use the funds. The borrower shall accept the examination, supervision and control of the loan bank when using the loan.

4. Different funds

Generally, the amount of discounted bills is not too large, and the term is short, usually 2-4 months. Loans have various forms, different maturities and generally larger scale. When the loan expires, the borrower may continue to borrow with the consent of the bank.

What are the similarities between bill discount and loan?

1. Discounts and loans belong to the credit category.

2. Both the discounter and the lender are financial institutions.

3. Discounting, like loans, follows the principle of legality and compliance; Principles of efficiency, safety and liquidity; The principles of equality, voluntariness, fairness and good faith; The principle of fair competition and close cooperation.