Short Term Working Capital B11-09b
Provide some advantages and disadvantages of using commercial paper for financing.
- Advantages:
- Interest rate generally lower, than other short-term funds.
- Unsecured; funds are for general use; compensating balances required; larger amount of funds available.
- Disadvantages:
- Available only to creditworthy firms.
- Requires repayment in the short-term.
- Lacks flexibility of extension compared to other loans.
