ɪn ɐdˈɪʃən, pˌiːˌaɪkˈeɪ lˈoʊnz tˈɪpɪkli kˈæɹi səbstˈænʃəl ɹᵻfaɪnˈænsɪŋ ɹˈɪsk, mˈiːnɪŋ ðætðə kˈæʃ flˈoʊ ʌvðə bˈɑːɹoʊɚɹ ɪnðə ɹᵻpˈeɪmənt pˈiəɹɪəd wɪl jˈuːʒuːəli nˌɑːt səfˈaɪs tə ɹᵻpˈeɪ ˈɔːl mˈʌnɪz ˈoʊd ɪf ðə kˈʌmpəni dʌznˌɑːt pɚfˈɔːɹm ˈɛksələntli.
In addition, PIK loans typically carry substantial refinancing risk, meaning that the cash flow of the borrower in the repayment period will usually not suffice to repay all monies owed if the company does not perform excellently.