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A trade finance limit is just opposite to an Invoice finance or Debtor finance limit.
A Trade finance limit enables you to pay your supplier upfront or in advance before receiving goods.
You can get up to 100% of your supplier’s invoice funded and have flexibility to repay up to 150 days term.
A trade finance is also called as supplier finance.
| Borrowing Limits | |
|---|---|
| Loan Amount | $100k- $150M |
| Term | Ongoing |
| Can be used for |
|
| Repayments | Gets settled against payment of invoices within 60-90 days |
| Security | Secured against current assets of the business No real estate security required |
| Pre-Approval Time | 24 hours – 72 hours |
| Unconditional Approval and Settlement Time | 7-10 days |
| Documents required |
|
| Interest Rates | Starts from 9.99% p.a. |
| Benefits |
|
Generally, businesses who are heavily reliant on domestic or international suppliers, needs to have access surplus cash flow to procure timely orders.
Having a trade finance limit enables a business to make prompt payment or advance payment to the supplier which gives them the buying power to negotiate better pricing with discounts and timely delivery.
With a Trade finance limit, you get an option to pay back the lender up to 150 days which is a good time fame to liquidate the orders, payback the lenders and book profits.
Order goods from your domestic/overseas supplier
Present your supplier’s invoice to the lender
The lender pays the supplier’s invoice
Payback the lender on agreed terms of repayment.
A trade finance facility may not be a suitable option for every business. However, it could be very useful for businesses involved in import and export of goods and services. A trade finance facility can be beneficial for both buyers and sellers.
For a buyer, generally paying for goods in advance becomes a big burden on the cash flow of the business and could witness several delays in procuring goods which can eventually impact the overall growth of the business. Having a trade finance facility helps them in making advance payment for goods to be imported and procure timely orders.
For a seller, exporting goods without receiving 100% advance may pose severe risk of default and hence they may not be comfortable dispatching the goods without receiving the full payment. A trade finance enables them to unlock cash flow from the manufactured goods in a much quicker time.
A trade finance facility not only helps to solve the liquidity problem for both buyers and sellers but also mitigates the risk in transactions involved in import/export of the goods between domestic and international trades.
Under a trade finance facility, once you receive an invoice from the supplier, you need to present it to the lender and the lenders pays to the supplier if it’s within the approved limit. You can pay back the lender on agreed terms.
A trade finance facility can be very useful for those who regularly need to order goods from domestic or international suppliers. They can pay the supplier in advance through the trade finance limit and can have quicker access to the goods. This also eliminates the risk involved in delivery of goods.
Yes, most of the lenders offer the option to remit the funds to the supplier in foreign currency.
Though the risk involved in a trade transaction is reduced to a certain scale on involving a third-party financier, there still exists some risks to both buyers and suppliers
Buyers
Sometimes, the supplier may not deliver the goods after receiving the advance payments from the financier. To mitigate this risk, generally, finance company do its due diligence on suppliers and may require payment acknowledgement documents against payment made.
Suppliers
Suppliers bear the risk of non-payment or delayed payment from buyers on delivery of goods. With a financier in picture, this risk gets eliminated as the lender makes advance payment or issue a letter of credit to the supplier before the goods are dispatched.
There could be other external risks like foreign exchange fluctuations risk, political and economical risks. Our expert team at Broc finance can help you to understand and mitigate these risks by pitching you with the right lender.
To be eligible for a trade finance facility in Australia, the business should be
You may get funded up to 100% of the supplier’s invoice.
We can get an indicative offer in as low as 48 hours of full application and limits can be unconditionally approval within 3-5 business days depending upon case to case.
At Broc Finance, we endeavour to get the most adequate facility suitable to the business requirements of our clients. In most of the cases logged in through us, we try to get an indicative offer from the lender for our client’s consideration before proceeding with formal application and consent to credit check. This approach helps our clients to avoid unwanted rejections and credit checks which can significantly impact their credit score.
Please feel free to contact us if you have any other questions. We would be more than happy to answer it.
Contact us today and discover how our expertise can help your small business thrive.
CALL US
1300 253 041
EMAIL US
enquiries@brocfinance.com.au
Broc Financial Services Pvt Ltd.
ACN 648 088 304
Credit Representative number 540795 is Authorised under Australian Credit Licence Number 389328