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A vast amount of SMEs and entrepreneurs who are interested in import-export trade activities rely on the availability of different financing sources such as loans etc. But getting funding improved is not as easy as it seems for them. Most times, they face rejections, restrictions, and various other complexities from traditional banks. Why?
Banks are often rigid to consider the financing request applications from those business owners or entrepreneurs who have smaller balance sheets, lower turnover, or are incapable of providing suitable security. Thus, it becomes difficult for startup owners or SMEs to cover the cost of the goods they plan to sell further. Even with a confirmed purchase order for products, banks don’t show interest to grant loans. Now you know why SMEs prefer trade finance.
While on the other hand, both small & large business owners aren't willing to wait for payment until shipment takes place which could take four to six weeks to arrive to an overseas buyer. Here, international trade finance instruments help SMEs with low volume to enter the global trade competition with equal opportunities and reduced foreign trade risks.