Bank loans for a company seeking short-term financing, Financial Management

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What are the pros and cons of commercial paper relative to bank loans for a company seeking short-term financing?

Commercial paper is generally a cheaper source of short-term financing for a firm compared to bank loans.  As well, a larger amount of finances can frequently be raised by issuing commercial paper.  Bank loans are typically a more flexible source of short-term financing and establishing an on-going business relationship with a bank may prove beneficial when money is tight.

 


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