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Compare trade finance for international business transactions

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

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Editor's choice: First Down Funding business loans

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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.

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 to compare

Data indicated here is updated regularly
Name Product Filter Values Loan amount APR Requirements
First Down Funding business loans
$4,000 – $300,000
5.49% to 22.79%
At least 1 year in business, an annual revenue of $100,000+, and a minimum credit score of 300
Alternative financing up to $300K with highly competitive rates.
Lendio business loan marketplace
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
Fundera
$2,500 – $5,000,000
7% to 30%
$300,000+ of annual revenue, 680+ personal credit score, in business for 3+ years
Get connected with short-term funding, SBA loans, lines of credit and more.
Kickpay e-commerce loans
$20,000 – $1,000,000
Not applicable
At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.
Get a loan for your e-commerce business based on your sales history.
Credibly Business Loans
$5,000 – $250,000
6+ months in business, $180K annual business revenue, 500+ credit $15K+ in monthly deposits
Funding to cover business expenses with daily or weekly repayments.
SmartBiz
$30,000 – $5,000,000
4.75% to 7.00%
650+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years
Get funding for your small business with a government-backed loan and extended repayment terms.
LendingClub small business loans
$5,000 – $500,000
9.77% to 35.98%
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
With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
Monevo Business Loans
$500 – $100,000
3.99% to 35.99%
Credit score of 500+, legal US resident and ages 18+.
Use this connection service to get paired with a loan you can use for business.
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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.

Bottom line

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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