Trade Finance
Export Finance & Import Finance Specialists
What is Trade Finance?
If your business buys stock or goods for onward sale, you can leverage against this stock to obtain working capital. That is, you can fund your international trade, also known as export finance or import finance.
There are various types of trade finance solutions that can be structured:
Finance available for the client to pay for the goods (works like an overdraft). The lender will advance a % against the existing stock (e.g. 50% - 70% of stock in balance sheet)
A more structured trade finance where payment is made by the trade finance company directly to the supplier of the goods. This can be used for domestic purchases or for imports (import finance).
The trade finance company will either give you a period of time to repay the amount borrowed, or will use another facility, such as a debtor finance facility to repay the amount borrowed for the stock. The client can choose up to 120 day terms to repay the debt to the lender at the time of the payment.
Can I be a start up company to ask for Trade Finance?
Yes, but stock would generally have to be against confirmed orders for good credit customers. Also, this type of small business finance tends to work only if the lender takes a second charge behind property.
Type of Stock
Generally finished goods or raw materials.
What if I am a retailer?
Would need to be strong or use other security (property).
How will the funder pay my suppliers?
Most of our trade finance lenders can pay your supplier directly. This might be via Letters of Credit payment against documents. Some methods are more expensive than others. Further, most lenders will be able to do this in the currency you have agreed to with your supplier.
Can I use trade finance to pay my suppliers in Australia?
Yes, all lenders will include in your trade finance facility an ability to pay Australian suppliers.
What are the Charges?
- Service Charge - A fee charged on the value of the purchases.
- Interest - Charged on the funds in use.
- Application Fee - A fee charged either on the facility or on the take-on value of the purchases.
- The rates charged will depend on volume, the level of service provided by the trade finance company and the assessed risk.
