Export Financing

Requirements

  • Payments have to be secured by a Stand-by Letter of Credit (SBLC) or an Income Stream Guarantee and/or other Collaterals such as Fiduciary Structures for Retention of Title and/or Assignment of Payments
  • The SBLC for example is only a collateral guarantee
  • Payments for partial deliveries can be drawn from the outstanding value of the SBLC collateral , in lieu of direct cash or wire transfer payments
  • Payment terms and conditions are usually customized on a case by case basis
  • Initial Collateral value must be equal to the value of the total transaction
  • Collateral form and structure to be acceptable to Adex
  • Collateral has to be issued and confirmed by a financial institution acceptable to Adex

Commercial LC vs Stand by LC

  • Letters of credit accomplish their purpose by substituting the credit of a bank for that of the buyer/customer. There are basically two types of letters of credit:
    • The Commercial Letter of Credit ( LC ), and/or
    • The Stand By Letter of Credit ( SBLC )
  • A Commercial Letter of Credit is the primary payment mechanism for a single transaction. This means that the seller expects to receive payment for each shipment from or through the bank that issued the LC – rather than from the buyer
  • In contrast, a Stand By Letter of Credit is referred to as a secondary payment mechanism. A SBLC (as the name suggests) affords the seller a guarantee of payment in the event that the buyer defaults on payment. Stand By Letters of Credit typically require less documentation than a Commercial Letter of Credit and are used for multiple revolving transactions during the life of the SBLC

Advantages of Equipment Financing

  • 100% Financing — Equipment leasing covers 100% of the equipment costs including sales tax, service agreements, training and installation
  • Conserve Working Capital — Purchase the equipment and technology the customer needs today while spreading their payments over the useful life of the asset. This allows them to preserve their capital for other day-to-day expenses such as inventory, personnel and marketing
  • Increased Company Value — Because a lease is not considered a long-term debt or liability, it does not appear as debt on your customers’ financial statement
    • Flexibility — As your customers’ business grows and their needs change, they can add to or upgrade through master leases or add-on addendums
    • Speed –Leasing allows the customer to respond quickly as their needs for equipment and technology arise. They can be approved with minimal documentation and have the equipment they need in operation and generating revenue for their business quickly
    • Customized Solutions –Leasing allows the customer to structure a financing program that addresses their key business issues, including: cash flow, budgeting and any seasonal fluctuations