Short$-$term bank loans usually are arranged under an ongoing line of credit with a bank or group of banks. When interest is

discounted from the face amount of a note $($a type of noninterest$-$bearing note$),$ the effective interest rate is higher than

the stated discount rate. Large, highly rated firms sometimes sell commercial paper directly to the buyer $($lender$)$ to borrow

funds at a lower rate than through a bank loan.