Top Import Export Finance Options For Your Business

International trading can be turned into a profitable business but then it requires a lot of money as investments. You will have to put in the effort to research your market well and identify those opportunities which can work in your favor. Again, research work needs a good team and you should have some money ready to carry out the tasks. Moreover, if you are already in your import-export business you will start making from the sales and this will provide you the liquid money to keep the chain moving. However, it can be a slow process and the right export/import finance can help you power up your business.

There are a few ways in which you can secure funds for your import-export business and they are:

Secure a loan through your inventory

You will be able to find a solution to your financial issues by having an inventory. You can start by evaluating the goods present in your inventory to know its value and get a loan based on that. This is one of the best ways to secure money for your business through external financing without having to actually sell anything. Moreover, you can achieve this in many ways. You can here make use of field warehousing, floor planning, or blanket inventory lien. In short, based on your business needs, you can choose the kind of inventory financing types that suits you.

You need to look into a few things when you plan to go for inventory financing. Before you can actually use inventory for your business benefit, you need to have a good credit record among other things. After that, you need to check your inventory and make a list of the products. You need to list out the objective value of each product then. When listing out their values you need to be clear that you should not put up the price for which you plan to sell it rather, it should be its worth. Once done that, you need to come up with a clear plan about how you are going to use the money you get this way and how you are going to pay it back.

You should only go for inventory financing if you are doing well in terms of sales and you can learn that from your previous sells and marketing analysis. In case you are not doing so well then it would not be the right solution for you. If your inventory does not have the potential to develop such investment then the company or person who is planning to fund you will not be much excited to invest money.

Get your manufacturer on board

You will come across many manufacturers when you are in an import export finance business. The foremost thing you will be doing is to find the manufacturer who can get you quality products at the best price. If you are able to pay for the products you bought from the manufacturer then you have no financial issues at all. In the other scenario, you will have to negotiate a deal with the manufacturer that can work for both parties well.

Some of the manufacturers will let you get great discounts when you are ordering in bulk. This will save you a lot of money and keep away from the financial crisis. Some manufacturers may even provide you products without making the payment first just by signing up a contract between both parties. Such kind of arrangement comes with some risks too. You will have to pay the manufacturer within the date mentioned in the contract. If you fail to make the payment on time then it can lead to legal issues.

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Manufacturers have no plan to take risks for you without any specific reason. So it is important that you should come up with a plan that is in their benefit too. You should assure them that you will pay them at the earliest and they will not lose money or goods by trusting and investing in your business. You will have to put in maximum effort for the first time, rest, the experience for both parties will be smoother.

Opt for a private company to get commercial finance

Contacting a private company is another way of securing funds for your business. Finding funds can be a real issue for business and private companies seem to be an easy solution when compared with banks. You should be specific about the clauses when forming the contract. You can even involve a lawyer when forming the contract to make sure that it is fair and that can be done by considering the finances involved. You will have to pay a certain amount based on the interest of the loan and you will get a set timeline to clear off the debt. The details of the loan and its payment will be discussed between both parties during the negotiation period.

Before you apply for such a loan you need to analyze your business first so as to know whether you will be able to pay back the loan on time or not. You also need to know the import opportunities and be sure that you have them in your control for a long time. So once you know that you can pay off the debt without putting your business at risk, you can choose to go with this option.

Make use of different financing programs of government

Companies of import-export companies get to enjoy some level of support from the state in many countries. You will be able to access such funds with little research and good luck. It is not that easy to get access to such government funds if you don’t have the right team or if your business is not well established. Such kind of state programs is available for a limited period and a long list of businesses are always there to access them.

You will have to represent your business and its mission through a well-established plan and it should be done for a year or so. When doing that, you need to describe your inventory well along with the different export opportunities you have. You need to reason everything properly to let them know why you need funds. The government will go through your plan, analyze it, and then based on that will respond to you.

If your company develops something that is beneficial for the country or the state or something that can improve the economy of your country then chances are higher that you will be able to get state finances for your use.

If you have just started your business and have no much idea of international commerce then there is no need to access government funds. On the contrary, if you are in this business for some time and very well know the opportunities that you can gain then there is nothing wrong with choosing this option. In case you fail to secure the funds then don’t get disappointed. Keep trying to get it the next time.

Approach bank for a loan

When it comes to securing funds, banks have proved to be a reliable partner for many, for years. However, banks follow strict regulations and this makes it tough for businesses to get funds. Moreover, banks will look into your financial potential and the condition of your import-export business, and your capability to pay back the loan. Chances are there that banks may not sanction your loan or may offer you a different amount. The sanctioned loan comes with a set interest and fixed EMI schedule. You are supposed to make regular payments to avoid any issues in the future.

When you are taking a loan from the bank, you have very little or no chances to make negotiations at your end. Banks follow strict norms and it is not much you can do in that area. Unless and until you are clear that your business has a great future, it would not be wise to take a loan from the bank as it can prove to be fatal for your business in the otherwise scenario. If you are a beginner in your business, then it would be wise to avoid banking finance. If you want to take a loan from the bank better you should seek the help of an expert for the job.

If you are fully aware of the different financial guidelines followed by different banks in your country then this can make big difference. You should also think about the means through which you plan to secure the loan as the bank will ask for some warranty to make sure they can recover the money if you fail to pay back the loan.

Before you go with the plan of securing a loan from the bank you need to look into the possibilities of getting the best deal for your business loan. Before submitting your loan papers, you can ask an expert to look into it first. He or she will analyze your papers first and will let you know about any hidden risks of showing some documents in the process. You need to be clear that once you sign the contract then there is no way that you can get rid of it. It has to be respected by both parties at any cost.

Final thoughts

Building an import-export business comes with many challenges and securing funds is prime one of them. Securing enough funds is important to keep the business moving before you start to get profits from your sells. Finding the right partner who can fund your business is the foremost priority. If that works well, then the rest can be dealt with too. So if you are looking for ways to finance your business, the options mentioned above can help you with the task.

What Is Structured Trade Finance And Why To Use It?

Structured trade finance is an alternative lending option, and it is a type of debt finance followed by many businesses. It has been used for cross-border trade with a proper structure in place. There are more things to know about it, and it has been explained below:

What is structured trade finance?

Structured trade finance is a kind of debt finance that is followed by alternative finance solutions. Such kind of finance method is generally used in the case of cross-border transactions and developing countries. This kind of Trade Finance is used in place of conventional banking in order to promote bi-lateral trade relationships with high-value transactions using non-standard security measures.

The structured trade finance method is used by many trading houses, organizations, banks, etc. STF or Structured trade Finance is a complex type of finance and is usually used for commodity trading of large quantities or products of high-value. Such kind of finance is agreed between two parties in a bilateral trading relationship by forming a proper structure.

The commodity sector majorly follows this kind of trade finance and it is mainly used by producers, processors, traders, and consumers. However, not all are provided with the same kind of package, it varies based on the need. Say, for example, you will find here pre-export finance, warehouse financing, borrowing base financing, etc. Now the parties taking up the money are self-liquidating. This means that they will get their money back once the products are exported or sold out. So in such cases, money is lent based on the set business trade cycle.

The structured trade finance enjoys the support of limited recourse trade finance ways and focuses mainly on product flows cross-border. If we look at the whole structure, you will understand that it comes with a good enhanced security mechanism and this helps to support borrowers in a good sense.

Why go for structured trade finance options?

The main idea behind going for structured trade finance solutions is to get rid of all the risks that come with trading in a specific country or different jurisdictions. Such structures in the transaction help to have better resilience to the trade business. It even helps with diversifying the funds, lengthening the payment times, enhancing the ability of the clients to increase the size of their facilities, and strategic procurement.

One of the reasons why structured trade finance is found to be attractive is that compared to the loan, the capability of the borrower who is part of the transaction is not much looked at. Here the main focus remains on the underlying business cash flows and the structure.

What makes structured trade finance important?

In a general scenario, structured trade finance is used for different kinds of lending. In this kind of lending, financings are structured in a different manner for the business with the aim of maintaining an independent structure that can work on its own. In order to make this work, different mechanisms are put together and this includes the role of insurance and a collateral manager and an escrow agent.

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In any relationship, agreement plays a key role. Such agreements must be governed by underlying covenants and by clear contracts. It needs to have clearer governing law clauses set, roles of the parties must be defined, and clauses must be enforceable. Such agreements will mainly focus on security documents and here priorities are clearly set in terms of asset charges, charges on the property, debentures, SBLCs, and guarantees.

Different types of structured trade finance

Structured trade finance is divided into a few types namely:

Final thoughts

The role of such trade finance is said to elevate in the coming years. Such trade options were said to be easy to liquidate and relatively safe in the times when there was very much dip in the trading activities. Trade finance products have proved beneficial for emerging economies and it will keep doing the same in the future too.

Top Shipping Finance Banks Backing Shipping Industry

Shipping finance is said to be playing a crucial role in covering the financial aspects of the maritime industry. It involves a lot of activities like buying ships, making upgrades in its body, or even getting some electronic parts repaired. Financial help is even opted for paying insurance. Just like any other business domain, the shipping industry also needs external financial help to keep floating! This is where shipping finance banks play a very critical role.

There are times when it becomes difficult for shipping companies to secure loans from traditional banks. It can happen due to many reasons! This is where alternative finance options come into play.

When we talk about shipping finance banks, there are some popular names in the market that can be approached for such finance needs. Here in this article, we will be talking about the same.

Michael Parker

Michael Parker is working with Citigroup for a long time now and is into ship finance in particular. Citigroup is one of its kinds of banks that has been heavily lending money in the shipping sector. Mr.Parker who earlier used to be the global head of shipping in the bank got promoted to become the chairman of the shipping and logistics division of the bank. His earlier post has now been occupied by Shreyas Chipalkatty, who is again a man of great capabilities!In his new role, Mr.Parker will be more concentrating on the environmental aspects before lending money to shipping companies. This does not come as a surprise as Mr.Parker has been the main mind behind the Poseidon Principles that has been accepted by 11 banks in the month of June to decide the lending criteria. The whole thing is about considering the carbon emission in mind when lending money to shipping companies.

Andreas Povlsen

Andreas Povlsen has worked tirelessly to turn Breakwater Capital into a known brand by building it from scratch. Mr.Povlsen started working on this London-based bank in 2011. Over the years he has been able to build some amazing relationships with ship-owners who were once clients of traditional shipping bankers. He has the knowledge to think above short-term benefits coming from private equity.Breakwater has made some of the best deals in the market and one of them which everyone knows about is of Hartmann Offshore and United Offshore Support under the banner of UOS. It worked well in the loan finance part of Global Ship Lease boxship purchases and in industry related to anchor-handling tug support.

Lee Donggull

Lee Donggull works with Korea Development Bank and 2019 has proved to be a milestone in his career. During his three-year term with the bank, he made a major leap in the second year by signing the Won2trn merger deal for Daewoo Shipbuilding & Marine Engineering and Hyundai Heavy Industries.The deal is worth $1.7 billion but it is still not done yet, to be specific. Still, it means a lot for the bank and its chairman, as they have already invested a lot in the shipping finance sector. The deal is still facing trouble in the context of gaining regulatory approvals from different jurisdictions.

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Mr.Lee is now trying to boost the economy by concentrating on other important aspects like streamlining the operations of two policy banks in Seoul. Moreover, at the beginning of 2019, Mr. Lee even suggested for the merger of the Export-Import Bank of Korea with KDB for improving the efficiency of the state budget.

Kristin Holth

Not many women have their names on this list. Kristin Holth from DNB still claims to be one of the leading women in ship finance even though its work in this field has fallen from $21bn to just $6.9bn in the last three-four years. Ms. Holth made one of the major decisions in her career last year just by deciding to not follow the Poseidon Principles which mainly focuses on environmental guidelines.Ms. Holth completed her graduation from the Norwegian School of Management and earned MSc in Business. She even learned international finance during her college days. She joined her current employer in 1984 and is working with them since then.

Andy Dacy

Andrian Dacy works at JP Morgan as their head of global transportation. The company is still taking equity positions in different shipping companies. He has immense knowledge in this field and this has helped him make wise investments in the banking space. Mr. Dacy has been an active participant in the shipping conference circuit and there he has pushed his interest in environmental protection when it comes to approving the loan applications of shipping companies.He stresses more on gaining increased importance for social, environmental, and governance targets.

Philipp Wunschmann

Berenberg is one of those European banks which have started to invest in the shipping industry lately. It has been lending good and getting a decent yield back. Philipp Wunschmann is working as the head of the shipping department Berenberg Bank. Earlier he had worked with Deutsche Schiffsbank unit of Commerzbank. He has carried out some other banking jobs like being the managing director of Shipping interests at Erck Rickmers.

Zhao Jiong

Over the years, Zhao Jiong has ensured to maintain a low-profile and is rarely seen speaking on public occasions. Still, he has managed to do his part and deliver remarkable expansion in shipping finance at Bocomm Financial Leasing which is actually a subsidiary of China’s Bank of Communications.The company is the largest shipping lessor in China and this excludes offshore businesses. In the year 2019, many deals were made by the company and out of which one of $750m orders with 10 of the largest ore carriers that are present over the yards of China.

Final thoughts

So here we are with some of the most influential people in the world who have proved their presence in the shipping finance industry. They have been playing a great role in offering ship finance and thus helping the shipping industry to grow and flourish. If you are looking for some alternative finance options then choosing Trade Credebt® can be the best bet. We can offer you excellent shipping finance solutions based on your business needs.