Trade financing for international business transactions | finder.com

Compare trade finance for international business transactions

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Trade finance services can offer you peace of mind when you buy or sell overseas.

Trading is no easy business. It involves complicated analysis of market conditions, a close monitoring of cultural and commercial situations, and a reliance on fluctuating exchange rates. So when it comes to the actual transaction, you want to make sure you’re using a service that you can rely on. This article will take you through the features of trade finance, how to compare a lender’s trade finance offerings, and how to find the best service for you.

National Business Capital Business Loans

National Business Capital Business Loans

National Business Capital provides small business owners with a range of financing options of up to $5,000,000 to grow their businesses.

  • Maximum Funding Amount: 5000000
  • Minimum Funding Amount: 10000
  • Numerous financing options
  • Simple and fast online application process
  • Must have been in business for at least 6 months
  • Must have an annual revenue of $180,000 or more

    What is trade finance?

    Trade finance is a service offered by a provider for people and businesses who engage in international transactions. They may offer services in addition to lending such as technology to manage finance, financial advice and risk management services.

    How does trade finance work?

    As domestic and international trade is a volatile marketplace, it’s quite common for businesses to use finance for international transactions. There is significant fluctuations in cash flow for these businesses, and there is little certainty with market conditions and foreign exchange rates, so trade finance comes with more flexible terms and amounts compared to other financing solutions.

    Trade finance, though, is not limited to lending. To engage in business overseas, you will need to use the services of a financing institution, but the level and type of services you use will be up to you. Some providers that offer trade finance services usually have a range of options available to you, and you are able to choose the products that will meet your business needs. Some of these services may include transactional technologies, research and analytics, trade finance facilities, and also, advice.

    Top business lenders you can compare

    Rates last updated December 10th, 2018
    Unfortunately, none of the business loan providers currently offer loans for these criteria.
    Name Product Product Description Min Loan Amount Max. Loan Amount Requirements
    LoanBuilder, A PayPal Service Business Loans
    Customizable loans with no origination fee for business owners in a hurry.
    $5,000
    $500,000
    Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
    Lendio Business Loan Marketplace
    Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
    $500
    $5,000,000
    Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
    LendingTree Business Loans
    Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.
    Credibly Business Loans
    Funding to cover business expenses with daily or weekly repayments.
    $5,000
    $250,000
    500+ personal credit score, 6+ months in business, $15,000+ average monthly deposits
    National Funding Small Business Loans
    Working capital loans and equipment financing, some high-risk industries may be eligible.
    $5,000
    $500,000
    Be in business at least one year and make at least $100,000 in annual sales. Other loan types have additional requirements.
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    $5,000
    $300,000
    12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    $5,000
    $500,000
    500+ personal credit score, 1+ years in business, $100,000+ annual revenue
    Fora Financial Business Loans
    No minimum credit score requirement and early repayment discounts for qualifying borrowers.
    $5,000
    $500,000
    Business age 6+ months. Monthly revenue $12,000+. No open bankruptcies.

    Compare up to 4 providers

    What are the types of trade finance?

    • Trade loan. If you’re in the import and export business, a trade loan can help you manage cash flow by working as a line of credit to be accessed in between selling goods and receiving payments.
    • Foreign exchange. Foreign exchange includes services for transactions, forwards and options that can help protect your business against unfavorable market changes, while also taking advantage of favorable currency movements.
    • Domestic trade services. This type of trade finance can fund domestic suppliers and support trading cycles within America.
    • Export services. Exporters may require documentary collections, letters of credit, collection negotiations, working capital guarantees, and financing solutions both pre- and post-shipping.
    • Import services. Businesses involved in importing may take advantage of documentary letters of credit, documentary collections and trade finance.
    • Cash flow services. These services include the management of foreign currency accounts, the facilitation of foreign currency overdrafts and telegraphic transfers.

    Do you receive supplies from overseas? Compare inventory financing options

    How do I compare trade finance providers?

      • Available currencies. Check if the provider can process transactions in the currencies you and your customers use.
      • Interest rate. You should check how often the interest will be calculated, which will ideally be daily, and you should also see how the interest rates for one provider weighs up against others.
      • Repayments. The timing of your repayments will work differently between providers, for instance, some may require you to pay at full maturity. This timing may impact your cash flow, so keep this in mind. You may want to choose a provider that offers a repayment structure that won’t have a negative impact on your business’ financials.
      • Financing terms. The financing terms for pre- and post-shipment finance will differ between lenders, and pre-shipment finance generally has shorter terms. Check the terms available before you apply to see if they will work for your business.

    What are the pros and cons of trade finance?

    Pros

    • Security. Some services allow you to protect your business against unfavorable foreign currency movements.
    • Options. Providers that offer trade finance services may have a range of other services available for you to choose from, some of which you may not have even known were available.

    Cons

    • Cost. As with other financing solutions, trade finance comes with a cost. Make sure you factor this cost into your business financials.

    Things to watch out for

    As with any financing, there are risks involved. You should always read the fine print before applying for any trade finance services to see any restrictions, especially as many of these services will need to be applicable internationally. For instance, some providers will only arrange spot and forward foreign exchange purchases for approved clients, so this is something that you would need to consider before you apply.

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