Loan for Exporters
Exporters need financing in pre-shipment, post-shipment, against collection of invoices at multiple stages of working capital cycle . Filecrat can get exporters the required loan at the click of a button.
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Loan for Exporters
An exporter in India gets support from the Government in various forms. India is known to be a great hub for exporting billions of products and services from India to various countries across the world. An export business can be started in India by registering a Private Limited Company or LLP and by obtaining a proper Tax Registration in the form of GST or TIN Registration along with IEC.
An Exporter needs Export finance at various stages of its business cycle, including:
- Post Shipment
- Finance against collection of invoices and at multiple stages of the working capital cycle
- Finance needed in case of suspension or removal of export subsidies and benefits
Benefits & Advantages of Export Finance
- Gains competitive edge by offering financing to prospective buyers
- Receives cash payment upon shipment or commissioning
- Does not tie up assets
- Avoids credit, currency and interest-rate risks in the settlement period
- Does not need to use administrative resources to collect the debt
Pre-Shipment finance is provided when an exporter needs funds before the shipment of products or goods. Funds are required for purchasing raw materials, processing of raw materials into finished goods, packaging goods, etc.
Packing Credit: You can avail pre-shipment finance against an export order received from the importer in the form of Packing Credit. Once the funds are received from the overseas buyer, the concerned export packing credit amount will be adjusted and loan will be closed against that order.
Business Loan: You can utilize a loan to purchase raw materials or to undertake the manufacturing of your product.
After the products have been shipped and invoice is raised to the importer, you will have to see through the credit period until you receive payment from your buyer. You may need working capital for this period to fulfill other orders. This can be resolved with post shipment finance from the following sources:
Bill Discounting and Invoice Factoring: You can present your invoice to a lender for faster liquidation. The banker or the financial institution could purchase, collect, or even discount the bill. For example in invoice Factoring you can submit your invoice along with certain other documents, which advances up to 80% of the invoice value within 24 hours. On maturity of the invoice, the importer pays lender, which then settles the remaining amount after accounting for the agreed-upon fee.
Export finance against the collection of bills: Banks generally agree to finance export bills which are repaid by guaranteeing companies in case of default. These lenders provide financial support of around 90% of the FOB (freight-on-board) value of the export.
Letter of Credit Discounting: Banks are often ready to finance against Letter of Credit (LC) as there is an inborn security in a confirmed LC that the issuing bank will make the payment in case of default.
Supplier's Credit & Buyer's Credit: There are also two distinct forms of financing you can tap (i) supplier’s credit, where the exporter’s bank finances the exporter with the full amount of the invoice while the importer can make payment in instalments to the exporter’s banker; and (ii) buyer’s credit, where the importer is given credit under the line of credit by your banker, thus facilitating your export transaction.
Who Can Provide Export Finance?
There are different banks, non-banking financial corporations, and foreign trade-specific lenders that offer financial assistance to exporters like you.
The Export-Import (EXIM) Bank of India provides buyer’s credit, corporate banking products, lines of credit, project-based finance, etc.
Banks, including nationalized banks, private sector banks, foreign banks, regional rural banks, certain cooperative banks, etc., all provide financing. Their services may include pre-shipment or post-shipment finance, lines of credit, foreign currency loans, advances against bills sent on collection/ deemed exports/ undrawn balance, etc. Of course, not all banks/ branches may offer export specific products.
Non-banking financial institutions can also offer one or more export-specific financial services like bill discounting, factoring, working capital loan, buyer loan, lines of credit, etc.
- Consultation with our Loan Advisor
- Complete Assistance in Paperwork
- Quick disbursal of loan
- Business Registration Proof such as Partnership Deed/ Certificate of Incorporation/ Shops and Establishment Certificate
- Copy of PAN card of the business and proprietors/ partners/ directors
- Address proof of Business and proprietors/ partners/ directors
- Last 3 years audited/ provisional financial statements
- GST Returns of last one year
- Current year performance and projected turnover on letterhead of the entity
- Last one year Income tax Returns
- Bank statement of last 12 months
To help the exporter complete the export order, packing credit loan can be extended by the bank. Packing credit is a type of bank loan for export business provided to an exporter for financing the purchase, processing, manufacturing or packing of goods required to export from India.
This type of loan is given by the bank to the exporters on the basis of export order from an overseas buyer and for the purpose of financing the purchase, processing, manufacturing or packaging of goods that are required to export from India.
India’s exports are financed through commercial banks such as ICICI, IDBI bank.
Reserve Bank of India provides Export Credit Refinance Scheme to the Banks at both pre-shipment level and post-shipment level on the basis of bank’s eligible outstanding rupees export credit. Banks can extend a loan of up to 15% of the outstanding export credit eligible for refinancing as at the end of the second preceding fortnight. As there is no collateral requirements so export credit refinance scheme must be repaid within 180 days.