Acceptance loan – what is it?

The word acceptance credit describes the acceptance of a loan. This happens because a credit institution such as the bank or savings bank assumes liability for the liability of a bill of exchange for its customers. This is a bill of exchange acceptance as an unconditional, fixed payment instruction from the exhibitor to the drawee of the bill of exchange.

Credit rating

Credit rating

With its promise, the bank assumes full responsibility for the exchange of bills. The risk is that the bank account is also covered accordingly at the time of the change. The account holder is usually expected to cover the account at least one day before the change is due. If not, the booking is made anyway. Now the lender has a latent credit default risk until the account is settled. Against this background, the acceptance credit is largely a matter of trust between the bank and the account holder. Accordingly, it must have a good credit rating, which must be first-class in the long term.

In most cases, this is secured by other balances with the bank or within the network of the bank or savings bank in question. Even if the acceptance credit results in a temporary underbooking, there is other value-based coverage that is guaranteed.

Acceptance credit in foreign trade

Acceptance credit in foreign trade

In this form it is used both as a means of payment and as a loan; This is especially so because it can be cheaper for the customer, ie cheaper than an installment, a framework or even a overdraft facility on the company account. With an acceptance credit, the undoubtedly very good creditworthiness of the bank is transferred to the bill and thus to its redeemability. The bank takes the place of the account holder as the customer’s contractual partner. Today, this loan is used almost exclusively for import business in foreign trade. As a financial change in domestic business, however, it has lost importance.

A foreign business partner often cannot or cannot correctly assess the creditworthiness and reliability of his counterpart. This is particularly often the case with new business relationships. An acceptance credit, ie the acceptance of the relevant credit institution, eliminates such uncertainties and ensures security in payment transactions. The customer’s unknown or non-verifiable creditworthiness is suddenly upgraded by the acceptance credit. The payee is now on the safe side.