International Trade Finance :
| While starting an international import-export business, careful management of finances is a vital aspect that must be given topmost priority. With the advent of globalization and liberal trade norms, competition has increased in the market. Most of the importers and exporters are currently relying on flexible payment options. |
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Although, trade finance is available in different options, it can be broadly summarized into pre-shipment financing and post-shipment financing.
Exporters usually resort to financing for the purpose of either purchasing their goods, for promoting sales, or for paying the costs incurred due to any engineering modifications or shipping costs. Depending on the requirements of the exporter, various financing sources are available in the market. These finances are available at variable terms depending on which the costs of borrowing, interest rates and the fees differ. There are various factors that a lender considers while financing. These include satisfactory credit repayment capability and the risk management for the product.
There are multiple types of financing options currently available in the market. These include trade finance loans, working capital loans and foreign buyer financing. Trade finance loans are usually aimed at financing a trade transaction. Working capital loans are granted for the purpose of financing pre-export operating costs which include labor, materials and inventory. Loans and credit programs are also provided to foreign buyers for making all kinds of bulk purchases.
For the purpose of providing finance and development of small business firms, TradePort export finance online (TEFO) program maintains a well-integrated network of commercial banks, lenders and brokers. Apart from these, there are various assistance programs offered by the federal government agencies for the purpose of supporting the financing needs of the exporters. Some of these agencies include the Small Business Administration (SBA), the U.S. Department of Agriculture (USDA) and Export Import Bank of the United States (EXIM Bank).
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