Like any business, export lenders look to minimise their risks. In this case there are 2 key areas of potential risk. The first is your company – they want to examine the possible risks your company poses before they approve finance. The second major risk area is that of international trade. The list below briefly outlines the major risks to international trade.
2. Experience: If you are a first time exporter, you could be seen as a high risk. International trade and delivery logistics are full of potential problems and they will want to know that you have fully researched this project and will be able to complete without encountering problems that could cause you to lose money.
3. Collateral and insurance: As with all commercial loans, you will be expected to provide collateral in order to secure the loan. The banks, in particular, will expect collateral. Try to negotiate that the goods themselves serve as cover for the finance. Some of the Government Incentive schemes are more lenient and will work on a case-by-case basis to decide on collateral amounts. Many financiers will insist on insurance of the exporter goods, credit insurance against non-payment of the overseas client, and foreign exchange insurance against currency fluctuations.
4. Credit rating of business owners: One of the ways lenders assess their risk is to look at the business owners credit rating. They are looking to see whether you are the type of person who manages their money well and has a history of repaying debt.
5. Assets and liabilities of business owners: One of the ways lenders lessen their risk is to demand that business owners sign personal surety. This means that they can attach your personal assets (for example, your house or car) in the event that the business does not repay the loan. Therefore, they want to see a list of assets owned by each business owner as well as what they owe. Please read the module on Understanding Personal Surety before you sign documents.
Finfind provides its services free of charge to businesses seeking finance. Our primary purpose is to link SMEs with all the relevant finance providers and finance products that match their funding needs. As a matching service we are not required to be a registered finance provider as we do not loan money directly.