Post by lakeenterprise on Jul 2, 2022 19:52:40 GMT
Commercial papers in the real world are short term loans, anywhere from overnight to 9 month. And many producers, like myself, have experienced the pain of liquidating goods way below their actual value to solve a cash crunch. Commercial Papers in SC would solve the problem
For SC, commercial paper would be a 1-5 day loan, where the company seeking a loan would put up some items that would match the loan value they are requesting. Ex: 1000 CUs for a $2.35mil loan. Except these collaterals would be valued at -15% market price. The collaterals will be "locked up", so the company can't post them on exchange or sell them via contract until the loan is paid back. This is to prevent companies from using these commercial paper to get rid of overpriced goods. Then Companies would post these commercial papers in the "Bonds" section of the exchange, they will list out 1) Amount of loan requested, 2) collateralized items, 3) length of the loan, and 4) Interest rate of the loan. Since these loans are suppose to be short term, and are basically no risk, the interest rate would be from 0.1% to 1%. Just like bonds, it is expected that the interest rate remain closer to the 0.1%, if not at the 0.1% mark. To make these commercial paper more favorable for the investors, they will not be counted in to AO. This will solve a tax problem for our big restaurant boys and a cash flow problem for our smaller and less cash rich producers. Companies that issue commercial papers can pay them back before the required date.
For example:
Lake Enterprise
Loan Amount: $2,000,000
Loan Length: 5 days (July 7th, 2022)
Collateralized Items: 1000 CUs, market price 2350. (Valued at $2,017,475)
Interest Rate: 0.2% per day
After the loan duration is up, the loan would be auto deducted from the companies cash balance. If the company fails to maintain a cash balance high enough, the collateral would be liquidated posted on the exchange at -5% current price. If the company resets or deletes, the investors will receive the collateral.
Again, commercial papers would be low risk, low reward. Where companies would receive pennies on the dollar in interest, but is guaranteed their money back.
For SC, commercial paper would be a 1-5 day loan, where the company seeking a loan would put up some items that would match the loan value they are requesting. Ex: 1000 CUs for a $2.35mil loan. Except these collaterals would be valued at -15% market price. The collaterals will be "locked up", so the company can't post them on exchange or sell them via contract until the loan is paid back. This is to prevent companies from using these commercial paper to get rid of overpriced goods. Then Companies would post these commercial papers in the "Bonds" section of the exchange, they will list out 1) Amount of loan requested, 2) collateralized items, 3) length of the loan, and 4) Interest rate of the loan. Since these loans are suppose to be short term, and are basically no risk, the interest rate would be from 0.1% to 1%. Just like bonds, it is expected that the interest rate remain closer to the 0.1%, if not at the 0.1% mark. To make these commercial paper more favorable for the investors, they will not be counted in to AO. This will solve a tax problem for our big restaurant boys and a cash flow problem for our smaller and less cash rich producers. Companies that issue commercial papers can pay them back before the required date.
For example:
Lake Enterprise
Loan Amount: $2,000,000
Loan Length: 5 days (July 7th, 2022)
Collateralized Items: 1000 CUs, market price 2350. (Valued at $2,017,475)
Interest Rate: 0.2% per day
After the loan duration is up, the loan would be auto deducted from the companies cash balance. If the company fails to maintain a cash balance high enough, the collateral would be liquidated posted on the exchange at -5% current price. If the company resets or deletes, the investors will receive the collateral.
Again, commercial papers would be low risk, low reward. Where companies would receive pennies on the dollar in interest, but is guaranteed their money back.
