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Trade Loans

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Trade Loans

We source high-quality trade loan solutions for our clients.

Our Trade Loan Service Offers:

  • Import Loans - Helping you purchase goods from overseas suppliers without tying up working capital
  • Export Loans - Supporting your business to fulfill international orders and manage production costs
  • Stock/Inventory Loans - Maintaining optimal inventory levels for businesses with regular import needs

Additional Trade Finance Solutions

  • Documentary Credits & Letters of Credit - Securing international transactions between buyers and sellers
  • Supply Chain Finance - Ensuring smooth payment flows throughout your supply chain
  • Invoice Finance - Both factoring and discounting options for international trade
  • Trade Finance Revolving Credit - Flexible ongoing credit facilities for regular importers/exporters
  • Export Guarantees and Bonds - Including bid bonds, performance bonds, and advance payment bonds

How We Help

  • Expert guidance on choosing the right trade finance solution
  • Access to competitive rates through our lender network
  • Support with UK Export Finance schemes and government backing
  • Risk reduction strategies for international trade
  • Assistance with complex documentation requirements
  • Ongoing support throughout the finance term

Contact our specialist trade finance team today to discuss your international trade requirements and find the perfect funding solution for your business.

We pride ourselves on providing excellent service that is responsive to your needs.

Call us on 0203 880 8890 to discuss your requirements

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Trade Loans - How It Works

When it comes to dealing with trade between countries, trust is an essential component. Differing laws and the complex process of cross-border litigation means that it is difficult to establish that trust without an intermediary, legitimate enough to be trusted by both sides of any trade agreement.

Through trade loans and associated letters of credit, a platform for reliability and trust can be established that enables each party to undertake their part of the trade process without trepidation.

The ‘Who Goes First’ Problem With International Trade

When a company in one country wants to buy products from a business in another country, a strange standoff can occur, with each business keen that the other goes first in the transaction.

  • The importer is keen that before any money is transferred, the goods have left the warehouse of the supplier and are proven to be on their way.
  • The supplier is equally keen that before they put their valuable products onto cargo transportation, the money has been transferred and payment settled.

With a lack of easy-to-access cross-border legal structure, neither company is in a position where they can go first. The importer worries that they’ll lose their money and the goods will never really be shipped, while the supplier fears they’ll ship product for which they’ll never be paid.

The lender will also issue a letter of credit to reassure the supplier that the goods can be released. Once the cargo is in transit, and the appropriate documents are provided to the bank, the funds are released and paid to the supplier. 

The Three Main Types of Trade Loan

Trade loans give businesses the financial backing they need to manage the cash flow challenges of international trade and grow their global operations. 

1

Import Loans

Import loans are trade loans that are tailored to helping importers - businesses that are bringing in goods for sale or raw materials for production from suppliers in other countries. They are the standard loan form that follows the procedure described above.

With an import loan, the importer can access additional funding capital to pay for the goods, either spreading the cost of the import across months or offsetting it until a secondary sale is completed - this eliminates the need to tie up existing cash capital from the business. An import loan accomplishes many things:

  • Lowers risk
  • Improves the relationship between supplier and importer
  • Allows for the purchase of goods without prior capital to do so
  • Provides an extended period where the goods can be processed and sold on before payment is due
  • Builds business growth through funding
  • Encourages national growth through international trade

How Import Loans Work

An import loan is a specialist form of finance that is often tied to a purchase order or sales contract as security.

The loan is applied for by an importer, and is paid to the supplier on their behalf. With flexible terms, the repayment of the loan is often not due until the onward sale of the goods to the importer’s customer, and any invoices from that sale are paid.

2

Export Loans

An export loan is a trade loan that provides funding needed to produce goods ready for exporting. Unlike an import loan, an export loan is not needed to improve the security or confidence of international shipping, but is a simpler form of purchase order finance that gives the exporter the financial support it needs to fulfil an export contract.

Export loans:

  • Allow companies to expand to foreign markets
  • Provide businesses with the capital needed to fulfil larger international orders
  • Helps the exporter improve relations with their international customers by allowing delayed payments
  • Give specialist support to businesses regarding global trade

How Export Loans Work

Export loans are a form of capital finance that use the purchase order or sales contract from an international customer as security.

The lender undertakes a thorough risk assessment, using their experience of the international market to examine the creditworthiness of both the exporter (applicant) and their customer (as security). If successful, an export loan is agreed and the funds provided to the applicant for use in producing and shipping the goods.

The loan is then repaid to the bank once the order is complete and the customer’s invoice paid.

3

Stock Loans

Also known as inventory loans, stock loans are a form of trade loan that’s designed to help an importing business keep a consistent level of stock for ongoing resale.

A stock loan eases cash flow by providing the importer with essential funding. Unlike an import loan, a stock loan does not leverage a customer’s purchase order as security, instead forming an asset-based loan with the stock as collateral. It is repaid on an ongoing monthly repayment schedule in a similar manner to other standard secured business loans.

How Stock Loans Work

Stock loans are an asset-based trade loan that is applied for by the importer, using the stock value as collateral and projected sales figures as part of the affordability assessment.

The loan is paid directly to the importer, who can then use it at their discretion to import goods from multiple international suppliers. With the funds in hand, the importing business can arrange for additional securities, such as letters of credit, if and when they become required.

Why Use a Trade Loan?

Whether you are an importer or an exporter, trade loans provide several benefits:

  • Reducing risk - International trade is fraught with risk. The additional measures that trade loans provide allow you to undertake trade with businesses in other countries with much of that risk lowered.
  • Providing expansion capital - The capital provided by a trade loan can boost your business to help growth by accessing international markets.
  • Smoothing cash flow - With long shipping times and potential delays, cash flow can become a problem for many businesses. The additional financial power of trade loans makes managing international logistics considerably easier.
  • Helping with shipping and other costs - The expense of global shipping cannot be ignored when considering trade with other countries. Trade loans ensure that you have the capital in place to cover any additional costs. 

How to Apply

At Clifton Private Finance, our dedicated international team have the expertise you need to navigate the complexities of global trade finance. If you are considering a trade loan to expand your business and grow in new directions, speak to one of our specialists to understand the spread of options available to you.

Contact Clifton Private Finance today.

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