Non-residents › Financing › Trade finance › Trade credit › Overview
Trade credit
Trade credit is useful for short term financing of trade operations, with the traded good acting as principal collateral.
Trade credit offers new opportunities for the following customers:
- wholesale companies (incl. transit)
- export-oriented production companies
Trade credit application prerequisites:
- the payment and operational risks of trade parties are acceptable to the bank
- an independent party (pawnbroker) is employed who is accepted by the bank (usually either a warehouse keeper or a dispatcher)
- the trade object can be realised easily and quickly
- the bank can monitor the flow of money between trade parties
Trade credit conditions:
- Deadline: up to 6 months
- Credit limit: starting from 2 000 000 EEK (127 823.30 euro)
- Interest rate:
- the bank’s base interest rate Sampo Prime, plus the risk premium or
- EONIA, plus the risk premium or USD ON Libor, plus the risk premium - Agreement fee: 0,25% – 1,0% of the limit
- Service fee: depending on the labour intentsity of the collateral procedures, at minimum 0,1% of the credit amount
- Loan repayment source: the flow of money from the trade (i.e. from the buyer)