Trade Finance

The purpose of Trade Finance is to bridge the funding gap between purchasing goods and the final sale to your customer. There are effectively two types of trade finance - Purchase Finance and Letters of Credit.

Purchase Finance

This is a short term of trade finance against a confirmed customer order. It is usually available for:

  • Importers / traders looking to source and supply goods within a short time period
  • Finished, identifiable goods which are non perishable
  • Businesses with experience in their trade
  • Predominantly for goods with high gross profit margins

Advantages of this trade finance are:

  • 100% finance (plus duty and VAT) can be provided
  • The trade financier relies on the strength of the transaction for security
  • It does not affect existing funding lines

Letters of Credit

Letters of Credit are a form of trade finance used to guarantee payment to the supplier in order to obtain the release of goods. They are available to importers and wholesalers that satisfy the following criteria:

  • Where there is a written purchase order for the goods
  • The purchaser can be underwritten, or credit insurance is available
  • Finished, identifiable goods which are non perishable
  • Businesses with experience in their trade
  • Predominantly for goods with high gross profit margins

Advantages of this trade finance are:

  • The forward order book can be turned into cash, rather than miss an opportunity
  • 100% finance (plus duty and VAT) can be provided
  • The trade financier relies on the strength of the transaction, the order and the quality of the ultimate purchaser
  • The letters of credit do not affect existing funding lines

Contact Sterling Capital Reserve regarding you Commercial Finance requirements