Trade Finance

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 stock finance, export finance or import finance.

There are various types of trade finance facilities that can be structured:

Facility available for the client to pay for the goods (works like an overdraft). The lender will advance a % against the existing stock (e.g. 20% - 50% of stock in balance sheet)
A more structured facility where payment is made by the international trade finance company directly to the supplier of the goods. This can be used for domestic purchases or for imports.

The international 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 30/60/90/120 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 international trade finance lenders can pay your supplier directly. This might be via Letters of Credit, payment against documents or by telegraphic transfer. Some methods are more expensive than others, for example, Letters of Credit cost more than telegraphic transfers.

Further, most lenders will be able to do this in the currency you have agreed 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 domestic/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 international trade finance company and the assessed risk.

I'm interested, what do I do?

Call Business Money on 1300 663 846 or send us an e-mail. Our extensive experience and knowledge of trade finance enables us to negotiate the most suitable and cost-effective solution.

We will source you the right solution, not just any solution.