Amounts: Typically for large amounts in excess of +- R 2,5 million
Speed of Funding: a few weeks
Terms: generally facility based
Interest Rates: Dependant on risk profile
What is Trade Finance?
Trade Finance is the finance of international and domestic trade transactions. It is generally used to secure inventory (stock) or raw material.
Is designed specifically to help mitigate the risk between seller (exporter) and buyer (importer)
The purchaser wants to reduce risk by knowing exactly what has been shipped
The seller wants to know that the buyer will pay
Finance Houses assist by providing support to both parties. For example, the importer's financier could provide a letter of credit to the exporter (or the exporter's bank) guaranteeing payment upon presentation of certain documents, such as a bill of loading.
Offers protection to the seller and the buyer
Preserves the buyers normal payment credit terms and does not burden the importer's balance sheet
It’s generally only available on trades in excess of +- R 3 million