A Quick Guide to Getting Export Financing in India

Finance can be called the lifeblood of any business organization. The export funds that an organization receives through the financing channels and be used for encouraging all the capital expenditure in the preliminary stage. Every business organization needs to find the fund to prepare the product for their day-to-day capital requirements. It also helps to meet unforeseen contingencies. 

You will find various sources of finance for meeting the capital requirements. It depends on the business’s financial sources to satisfy its needs. But it is advisable that every business organization must choose a suitable financial source that helps to fit the long-term strategies while financing the export business.

Why does a company require export finance?

Before any company decides how to source export finance, it is important to identify why one requires the funds. Some of the reasons include:

  • Setting up a new export business

For building up a new export business, you would require financial support. When you want to acquire an existing business or renovate and modernize your existing business, you need the help of export financing. It helps the business target various international markets while prioritizing the financing requirements.

  • Business expansion

The growth of the business might require the input of finance into the business. For this reason, the business requires large-scale finance. Due to this reason, the business requires indulging in export finance to set up additional spaces.

  • Working capital

Daily operation and business development finance can constitute the biggest requirement for export finance. This finance would be called the working capital finance. Except for every new business, one requires funds only to accommodate the credit period of the buyer. It can be except through various loan products like pre-shipment finance. The business must also require large working capital for arranging inventories at some point or the other. Hence, if the business has enough cash, the enterprise can compete in the market while mastering the financial clout and taking up several new ventures.

The business requires export financing at the various stages of its business cycle. Some of these stages include:

  • Post shipment stage
  • Pre-shipment stage
  • Financing against the collection of invoices during the multiple stages of the working capital cycle
  • Finance that business organizations need to remove or suspend any export subsidies and benefits.

Who offers export finance in India?

Various non-banking financial corporations, financial banking corporations, and foreign trade lenders offer export finance in India. Some of it includes:

  • The Export-Import Bank of India helps provide corporate banking products, buyer’s credit, project-based finance, lines of credit, and many more.
  • Banks, including the private sector banks or nationalized banks, provide financing. Some of the services of these banks include post-shipment finance, pre-shipment finance, foreign currency loans, lines of credit and many more.
  • Various non-banking financial institutions offer one or more than one export-specific financial service, including factoring, bill discounting, lines of credit and many more.

Make sure that you do not get business finance beyond your repayment capacity. 

Any default in such a situation would erode your credibility for any financial purposes in the future.

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