Advantages and Disadvantages of Trade Finance

Trade Finance explained

Trade finance is an important external source of working capital financing. It is a form of short-term credit typically used by companies that export or import goods.

Have the facts before you apply

Trade finance is an important external source of working capital finance. It is a form of short-term credit typically used by companies that export or import goods. It is relatively easy to secure short term finance, if you have a string trading record, secured against good or backed by an insurance policy.

There are a number of banks and specialist finance providers on the Finpoint funder panel that offer trade finance across the world.

Advantages of trade finance

Advantages include:

a relatively easy way to arrange short-term finance

it helps business to focus on growth activities

the finance is typically secured against the goods or backed by an insurance policy

Disadvantages of trade finance

Disadvantages include:

it is usually based on having a good track record in terms of operations and repayments, and therefore less accessible for new companies

it can become very expensive, if payments are not made on time

Borrow

From £1,000 to £1.5 million or more

Terms

From 1 months to 2 years

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