It is not that easy to get financing from bank nowadays, especially because of the poor economy the country is experiencing. However, businesses need to be persistent in their desire to grow their company. In order to help small, medium and even big businesses out there get their export financing, here are some of the best practices you should follow.
If you are a big company, an already established one, then you will have little problems when it comes to securing loans from banks. Banks typically do not allow foreign assets and they are suspicious of any foreign business entity, unless you are an internationally known company that is. If you are a start up business and you would like to enter the global market there are other institutions you can approach for help.
For small to medium businesses, you can approach the Small Business Administration Export Assistance Program. There are also private lenders who are willing to help you out as long as you have a solid financial record. The Ex-Im Bank is able to give out export loans to companies that have less than 500 employees.
If you are in dire need of collateral you have to show your lender, then you can use your receivables as collateral. Most manufacturing companies have thousands and even millions of receivables. This can help you a lot in your export import financing. Some banks give out recourse lending when the loan collaterals are receivables.
However, you have to think about the option of recourse loan as source of your export import financing. There are risks attached to it as well. You have to do a lot of financial planning just to be able to get rid of the receivables in your balance sheet. This can be a problem if you wan to sell as soon as possible.
You should remember to guard your receivables so you are assured you get paid in the end. One way of assurance is by getting export insurance. Export insurance will protect you from the insolvency of your clients’ business no matter what the cause may be.