An import finance facility is also known as an import loan.
- An import loan is a short-term cash advance that enables an importer to meet the seller’s payment requirements either under a sight or usance letter of credit or some other form of documentary collection.
- a bank which is providing the finance under the import loan, finances the customer’s import commitments by committing to, or making payment against the letter of credit or documentary collection and receives payment from the importer at a pre-determined date in the future.
- in these circumstances the credit period between the time that the bank provides or commits finance and the time the customer repays the bank, should be sufficient for the customer to effect sale of the imported goods and receive payment from its customers.
Our clients will often ask our trade finance experts what the benefits are of an import finance facility or an import loan? The main benefit is that it affords the importer more financial resources to buy goods, clear goods from the port, arrange transport and conclude a sale to the end buyer without tying up its own cash. As the supplier is independent of the process of raising finance, the supplier will not have to sign any documentation, but will receive payment as per the original contract terms via the letter of credit or bill for collection.
Do the terms letter of credit, bill of exchange or documentary collection confuse you? If so, please our expert trade finance solicitors to assist you.
Please contact one of our friendly expert trade finance solicitors now for your import finance facility consultation. At Francis Wilks & Jones, we have a team of trade finance experts ready to take your call and help you to continue trading and benefit from using import finance. Whatever your question, we can help you.