Which Companies Offer Export Financing Services?

Kinds of Export Finance
Some of the key export finance types are as follows:

Pre-Shipment Finance:

It is also known as “packing credit.” It is offered when the seller or exporter requires payment before the products or commodities are shipped. Funding is available to acquire raw materials or items, their processing into completed products, warehousing costs, packaging, and labeling of commodities before the shipment. When the importer places a definite order, this form of financing is granted. As Pre-shipment finance is a working capital loan, it is given for six months or 180 days.

Post-Shipment Finance: Once the products are delivered to the importers, the exporter will prepare a bill that the importer must pay. The exporter usually collects the money in 3-6 months. The exporter’s output is affected by the time difference. The bill will be presented to the banking institution that finances exports for this function. The bank can purchase, collect, or adjust the bill.

Export Finance based on Bill Collection: The exporter can get financing or a loan based on the importer’s or an overseas company’s purchase bills. In default, the financing firm will reimburse about 80% of the owed amount.

Deferred Export Financing: Importers or overseas purchasers can get financing to ease the import of products. Two distinct types of deferred export financing:

Supplier Finance: Funding is granted to the exporters by the exporter’s bank to sell the items on an installment basis.

Buyer Finance: The exporter’s firm provides financing to a foreign buyer.

5. Export Finance against Allowances and Subsidies: When domestic and international developments cause unanticipated increases in spending, the government offers subsidies or allowances or exports of products at a lower price to the importers.

Which Companies Offer Export Financing Services?
Export financing can be provided by traditional lenders such as banks or factoring firms and alternative financing providers such as FinTech companies. They are different in a few ways:

Traditional Lenders for Export Finance: Their standards are usually a little more severe than alternative lenders. The onboarding process for export funding is lengthy and inconvenient. The bureaucratic element might take up to three months to complete. Because the volume of transactions is enormous, the cost of borrowing money is cheap. On the sales side, there are large margins.

Obtaining Alternative Financing for Exports: FinTech businesses have recently gained entry into the trade finance industry. They merged with the large banks and conventional lenders, battling down to the “Tech” core. Working cash can be obtained from other lenders in a brief period. Onboarding takes only just a few weeks in most cases. During this period, the finance team evaluates the applicant’s case.