Trade finance or trading loan is any financing that is provided for the purpose of conducting domestic and/or international trade between a buyer and a seller. Banks and financial institutions can be the providers of such financing and thus allow the transaction.
This kind of financing may allow an extra level of protection to the buyer and a quicker access to the funds generated by the transaction for the seller. There can be a few specific types of loans that are based on or provide support to traditional trade loans. Such can be documentary collection, trade credit insurance, factoring and forfeiting.
A trade finance or trading loan availed from most banks will normally have one or all of the following products and/or services –
Globally, eligibility criteria for availing a trade finance remains more or less the same. Since it is a loan by all means, most of the regulations and requirements of a conventional trade finance remain standard. Based upon specific banks, additional criteria might come into play, but on an average, the following conditions, if met, qualify a customer to avail a trade loan without any hassle –
A few of the necessary details that are common to most trade finance schemes are mentioned below -
Being a Secured Loan, there are specific documents that need to be furnished for a borrower to avail a trade finance scheme without any hassle. The most common documents required while applying for a trade loan are as follows