Pre-shipment Export Finance is the key to helping businesses expand their operations, increase profits and affirm their position in the international market. Let's learn about this breakthrough financial method and how to effectively apply it to your business right away.
What is pre-shipment export financing?
Pre-shipment Export Finance is a form of bank credit for export enterprises to supplement working capital for purchasing raw materials, manufacturing, processing, and trading export goods.
Pre-shipment export financing is a bank credit product.
What is the pre-shipment export financing process?
The pre-shipment export financing process may vary slightly from bank to bank, however, to better understand how this process works, you can refer to the pre-shipment export financing process at SeABank as follows:
Step 1. Businesses submit applications for funding
Documents that businesses need to prepare to apply for pre-shipment export financing include:
- Legal documents.
- Export contract (Sales Contract/Purchase Order/Proforma Invoice/.vv..) or export L/C.
- Documents proving the buyer's ability to pay (if any).
- Financial records.
- Collateral profile.
- Other documents as required by the Bank.
Step 2. The bank conducts file appraisal.
After preparing all the documents, the enterprise will submit the documents to SeABank to register for pre-shipment export financing. At this time, SeABank will perform the following operations:
- Consider the validity of loan applications according to Bank regulations.
- Assess the buyer's ability to pay.
- Assess the financial capacity of the borrowing business, ensuring the ability to repay the debt within the committed period.
- Evaluate the legal use of loan capital.
- Evaluate effective and feasible business plans.
- Determine loan amount and loan term.
- Determine interest rates and service fees.
SeABank will conduct appraisal of export financing documents before delivery.
Step 3. Both parties sign the sponsorship contract
The two parties sign a Loan Agreement, which clearly states the terms and conditions of the loan, including:
- Loan limit/Amount
- Loan term.
- Interest rate.
- Service fee (if any)
- Disbursement method.
- Method of payment of interest and principal.
- Collateral (if any).
- Terms of commitment and responsibilities of both parties.
The two parties sign the mortgage contract, complete the procedures for collateral and other documents according to the bank's regulations.
Step 4. Bank disburses loan
After signing the loan contract, the bank will disburse the loan to the enterprise according to the agreement in the contract. The enterprise uses the loan to purchase raw materials, produce, process, manufacture and export goods according to the export contract.
Step 5. The business collects sales proceeds and repays the loan.
After exporting goods and collecting sales proceeds, the business will use this money to pay off the loan including principal, interest and related fees to the bank.
Advantages and disadvantages of pre-shipment export financing
The advantages and disadvantages of pre-shipment export financing include the following factors:
Benefits of pre-shipment export financing
Pre-shipment export financing plays an important role and brings many benefits to export enterprises as follows:
- Provide capital for manufacturing and export businesses.
- Help businesses speed up production and export of goods.
- Increase business competitiveness in the international market.
- Minimize payment risks for exporting businesses.
- Contribute to promoting exports and developing the national economy.
Pre-shipment export financing helps businesses reduce payment risks
Limitations of pre-shipment export financing
Besides the benefits, this payment method also has some limitations as follows:
- The business must pay interest and fees associated with the loan.
- Businesses may be required to have collateral for the loan (except in some special cases as prescribed by each bank).
- Businesses need to strictly manage the use of borrowed capital.
- Enterprises need to ensure proper performance of their obligations to pay principal and interest to the bank.
Where should pre-shipment export finance be used?
Pre-shipment export finance can be a useful financial tool for exporting businesses, but to ensure you choose the right provider, businesses need to pay attention to the following issues:
Factors to consider when choosing
Choosing where to do pre-shipment export financingfor businessdepends on many factors, including:
- Your business's financial needs: Amount of capital needed, loan term, desired payment method, etc.
- Interest rates and loan fees vary from bank to bank.
- Quality of bank customer service.
- Bank reputation and financial capacity.
- The existing partnership between your business and the bank.
SeABank's pre-shipment export financing - the optimal solution for businesses
SeABank's pre-shipment export financing service is a breakthrough in supporting Export Enterprises. SeABank's service has been helping many export enterprises today to access working capital quickly and flexibly to promote the production and delivery process.
In addition, SeABank's pre-shipment export financing service also provides businesses with some outstanding benefits as follows:
- Being financed throughout the Customer's export journey including before and after delivery, from the time of having an export contract, having an L/C to having a set of documents.
- Disbursement immediately from the time of signing the contract/order or receiving an export L/C, diversifying capital sources, reducing the financial burden for businesses.
- Competitive financing rate up to 80% of the export contract value or 90% of the export L/C value
- Enjoy competitive interest rates, suitable for the financial capacity of the enterprise, optimizing operating costs.
- Using flexible collateral, accepting collateral as future debt claims and debt claims already formed from the export contract or export L/C.
- Financing term up to 9 months, free consultation on preparing export documents, ensuring complete and quick loan application.
- Simple and quick loan procedures, saving time and effort for enterprises.
SeABank is providing pre-shipment export financing services with many incentives.
In short, pre-shipment export financing is a solution to help exporting businesses overcome financial challenges and increase their competitiveness in the international market. If you are looking for a reliable partner to support pre-shipment export financing, please contact SeABank immediately. SeABank will be ready to listen and advise on the most suitable solutions for your needs.
Please contact SeABank immediately via website or Hotline 1900.599.952 (KHDN) for detailed advice and answers to all your questions about pre-shipment export financing.
