Things To Know About Import Loans

Money is a crucial factor that can break or make a business. Of course, there are numerous tasks business owners need to deal with wherein money must be used. For instance, when getting raw materials for your products, you need to pay for it. Apart from that, you also need to pay your employees. And, transportation of products must also be paid. Unfortunately, there are cases when business owners do not have sufficient finances which can affect their business. Luckily, there are some banking institutions that offer loans.

As of now, there are numerous types of loans business owners can choose from. And, one of the best types of loans that can help businesses is import loan. To help you learn more about import loan, below are some of the things you need to know.

How import loan works

An import loan is a service offered by banking institutions that provide you with short-term, trade-related working capital for your international purchases on a pre-shipment or post-shipment basis. Banking institutions will then pay your suppliers directly based on the invoice and transport documents.

The loan banking institutions will provide are given on a stand-alone basis for open-account transactions, or coupled with Documentary Credits or Bills for Collection where you have a post-shipment funding gap.

Key benefits

Just like any services, import loans can provide business owners with numerous benefits. Below are some of the following.

Import loans will allow the customers to gain more financial resources to clear goods from the port and manufacture, store or arrange for final sale to the end buyer.

The customer is able to reimburse the suppliers on a sight basis or when the tenor is due, which will increase the bargaining power of the customer.

Pay your suppliers more promptly to negotiate better terms.

Types of import loans

In order to attain the benefits mentioned above, it is important to opt for the right import loan. To make better decisions, below are some of the most common types of import loans.

Pre-Shipment Clean Import Loan – This type of import loan is available when you are trading on open account or documentary collections, and suitable where you need to finance the advance payment portion of a contract.

Loan against Import – This type of loan is available when you are trading under an Import Documentary Credit or Import Bill for Collection.

Clean Import Loan – This type of import loan is triggered by the receipt of an Import Documentary Credit or Import Bill for Collection or where you are transacting on open-account terms.

With all these, business owners can make better decisions when planning to get import loans.

By: Greg Sawyer – Info Source From www.business.hsbc.ae/en-gb/managing-risk/productfamily/imports