Commercial paper is an unsecured, short-term debt instrument issued by a highly rated corporation with audited financial statements from a CPA or major CPA firm. Commercial paper is usually documented as a promissory note and is issued at a discount from its face value. Minimum denominations are usually $100,000. Terms to maturity extend up to 270 days, but most are issued for a period of 30 days. Commercial paper is commonly issued to finance corporate payrolls and short-term liabilities: Interest rates are based upon the prevailing market and the credit standing of the issuer.

Issuers of commercial paper generally back up the issuance of their commercial paper with a backup line of credit from a commercial bank. One of the major advantages to issuing commercial paper is that it does not have to be registered with the Securities and Exchange Commission (SEC) as long as it matures in no more than 270 days.

Buyers of commercial paper include retirement funds, investment companies, state and local governments, and accredited investors.