A commercial paper that is issued by financial institutions such as banks or insurance companies. Financial commercial paper issuance accounts for the majority of the commercial paper market. This type of commercial paper is an important source of external funding for financial corporate borrowers and it is typically used to finance their working capital requirements. For financial companies very high credit rating, commercial paper might be one of the cheapest sources of external funding.

Large financial institutions can afford to sell paper directly to investors, while small institutions resort to dealers in order to place their issues (a paper issued this way is called a dealer-placed commercial paper). The spread between financial commercial paper and nonfinancial commercial paper reflects the cost of raising capital for financial institutions relative to their nonfinancial counterparts.