What requirements must be met to receive trade finance?
Trade finance is available for those bank clients who have stable turnover and a minimum one year’s experience of trading the respective goods. Participation of the client in such financing – from 50% to 10% (depending on the good’s type and structure of the deal). Financing can be provided against goods in stock or in transit, as well against claim rights, secured by bank guarantees, insurance policies or documentary letters of credit. The minimum amount of a credit line is EUR 1 million, the maximum is EUR 25 million euros; term – up to 12 months (with a possibility of extension).
What are the main options for trade finance?
Financing of purchase of the goods
The bank finances purchase of the goods intended for export by issuing letters of credit or guarantees; or the bank makes an advance payment in favour of the approved manufacturer \ supplier.
Financing is provided from the day of the advance payment or shipment of the goods until their dispatch from the terminal (including accumulation and storage of the goods at a terminal acceptable for the bank), or until receipt of payment from the end buyer of the goods..
Financing at warehouses in the Baltic countries and Black sea region
The Bank finances a trading company against warehoused goods placed in a customs warehouse, a terminal or a consignment warehouse agreed upon with the Bank. The company can receive a certain part of the pledged goods value in the form of the loan. The trading company can receive the goods from the warehouse after repayment of the relevant part of the credit line. In some cases, this type of financing can be extended to “Financing against bills of lading”.
Financing against bills of lading
A trading company purchase goods at its own or a supplier’s expense. Upon receipt of the bills of lading, confirming shipment of the goods, and presenting them to the bank, the trading company receives financing in the form of a loan, which must be repaid upon arrival of the goods to the port of destination, upon the receipt of payment from the end buyer or, in case of their further placement in a pre-agreed customs warehouse, terminal or consignment warehouse immediately prior to the receipt of the goods from the warehouse.
Financing of the deferred payment
The bank finances a trading company for the time period for which the company has provided a deferred payment terms to its partner (buyer of the goods). Obligations of the buyer in this case must be guaranteed by an insurance policy, a letter of credit or a guarantee acceptable for the bank.