TRADE FINANCE
Also known as Stock Finance, Inventory Finance and Import Funding.
Increase your stock levels with inventory funding and grow your business with the cash.
You have orders for goods or equipment from customers and do not have the money to fund the deals, or your company is growing and you want to increase your stock levels.
Trade finance is the financing of international trade by third-party lenders. It refers to the various methods used to finance the export, import and distribution of goods and services. Businesses use trade finance to minimize the risk of non-payment by buyers and to obtain the best possible terms of trade from suppliers.
The most common method of trade finance is through trade credit, which is when a business extends credit to its customers to purchase goods or services. Trade credit can be unsecured or secured, depending on the agreement between the buyer and seller. Unsecured trade credit is riskier for the creditor, as there is no collateral securing the loan. However, unsecured trade credit may offer more favorable terms for the debtor, such as a lower interest rate.
Other methods of trade finance include letters of credit, export financing, and factoring. Letters of credit are often used in international transactions to mitigate the risk of non-payment by the buyer. Export financing is a type of loan that helps businesses finance exports. Factoring is when a business sells its receivables (invoices) at a discount to another company in order to receive immediate payment.
Trade finance can be a complex and confusing topic for businesses, but it is an important part of conducting international trade. By understanding the various methods of trade finance, businesses can choose the option that best suits their needs and minimize their risks in international transactions.
Our funding partners and associates will set up a facility for funding the operational cycle from when payment is made to your supplier until receipt of funds from your customers. This allows you to take advantage of sales opportunities and purchase discounts. You will not need to use any of your cash !
Purchases of both local and imported stock can be financed. Payment is made directly to your supplier or a Letter of Credit is drawn up.
What is Trade Finance?
These are financial instruments, loans, equity finance structures that enable businesses to fund transactions like imports, exports and local trade. The term Trade Finance covers a broad range of financial programs that assist businesses.
What is Import Funding?
This is funding that is used to pay an overseas supplier for goods to be shipped to you or your client. Imported goods can take a lot of time to arrive at their destination and so buyers need to have large amounts of cash available, to fund these transactions. Import funding lines of credit are an essential part of this type of transaction.
What is Stock/Inventory/Supply Chain Funding?
This is working capital financing that is used by manufacturers and distributors to fund their purchases and running expenses, while they manufacture or distribute goods.
Requirements
We can assist companies if:
- the company has a proven track record in their industry ( at least 2 years successful trading)
- there is a confirmed order for goods from a credit worthy customer (must be a company, not a private individual, and not a government or municipal department) accounts receivable funding is possible.
- the supplier of the goods is an accredited supplier
- the company can provide the necessary supporting documentation
- the transaction size is R1 million or more
A monthly discounting fee of up to 7 % pm (subject to due diligence and risk profile) is charged, and a once-off set up fee of up to 3 % (which is dependent on the deal size) is levied for funding capital.
Supporting Documents
We detail below the documents that we require for capital funding and trade finance. In order to increase the likelihood of us being able to source suitable funding, it is essential that your presentations to us are comprehensive and current. If they lack information it will be impossible to secure an approval.
- Certificate of Incorporation, Memorandum and Articles of Association or Founding Statements
- Latest audited financial statements
- Up to date management accounts
- Budget and cashflow projections
- Debtors Age Analysis for the past 3 months
- Creditors Age Analysis for the past 3 months
- Documentation with respect to the order:
- the purchase order from your client
- the quotation or proforma invoice from the supplier
- your purchase order to the supplier
- Statement of personal assets & liabilities of shareholders / members
- Identity documents of shareholders / members
On receipt of these, the bridging company will indicate its level of interest and call for further information if they wish to proceed.
Cost Schedule
- Minimum Term – 3 months
- Maximum Term – 6 months
- Minimum APR – 13 %
- Maximum APR – 30 %
Example :
- Loan R 1 million
- Term R 1 year
- APR 13 %
- Repayment R 1 130 000
Subject to lenders Terms and Conditions at time of quote.
Financiers receive hundreds of applications daily and only those that are well presented and hold financial merit are considered. It is extremely important that the business that is applying for the loan is profitable and that the borrower has a clean credit record.
While waiting for your Trade Finance/Purchase Order Bridging facility to be set up, which can take up 3 weeks or longer, you should apply for an UNSECURED BUSINESS LOAN of R 50 000 up to R 1,5 mill, which can be approved in 3 days (if you have been trading for 12 months, have a turnover of R 1 mill pa and have a clear credit record)
THE BELOW FORM ONLY APPLIES TO TRADE FINANCE, INVENTORY FUNDING AND IMPORT FUNDING. PLEASE ONLY SUBMIT THE FORM ONCE AND CHECK YOUR INBOX FOR A CONFIRMATION EMAIL.