SME short-term loans, structured as bullet loans, cannot be traded on the secondary market due to specific characteristics that make such transactions impractical. Unlike installment loans, they do not provide regular payments that allow potential buyers to assess the borrower’s reliability and creditworthiness.

1. Lack of Transparency About the Borrower

With installment loans, regular repayments offer clear insight into the borrower’s reliability. Meeting payment deadlines provides buyers on the secondary market with a solid basis to evaluate the risk. Bullet loans, however, do not offer this transparency, as repayment, including interest, occurs only at the end of the loan term.

2. Risk of Interest Collection by the Seller

If an SME short-term loan is sold on the secondary market, the original investor (seller) could collect all accrued interest up to that point without bearing the ongoing risk of loan default. This puts the buyer at a disadvantage, as they assume the full risk without receiving a fair share of the previously accrued interest.

3. Protection for Buyers

To protect buyers on the secondary market from such disadvantages and ensure transparency, SME short-term loans are not eligible for trading on the secondary market. This rule ensures fairness and a balanced risk-return distribution among all parties.