Negotiation loan

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The negotiation credit , often also negotiation credit , is a form of foreign trade financing by means of a bill of exchange , which occurs mainly in overseas business.

The exporter's (seller's) bank buys a bill of exchange drawn from the seller to the importer (recipient of the goods) on the basis of the freight documents, even before the underlying transaction is fully processed. The exporter's bank, in turn, secures itself at the same time with a letter of credit from the importer's bank or buys this bill of exchange directly on behalf of the recipient's bank.

Related to the negotiation loan is the redemption loan , in which the exporter's bank only accepts the bill of exchange and does not discount it .