How Trade Finance is Helping to Elevate the Next Generation of Kenyan Businesses

As a little Company homeowner, you know your local limits when accessing loans or other interim financing options just to cover the cost of property you intend to buy or sell.

Importance of trade finance. Photo: Cooperative Bank.
Source: Twitter

There are many ways to obtain financing for your business, but not all of them offer you multiple advantages, because trade finance Is.

Many banks do not offer overdraft or ready protection for such transactions, even if you have a confirmed order for the products or goods.

Plus, you also don’t want to buy goods and they end up taking weeks or months to arrive from the international manufacturer.

It just ties your money to shipping, leaving your business stagnant and your bank accounts dry.

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On the other hand, if you are a large exporter, you don’t have the luxury of waiting for your export goods to arrive at a distant destination weeks or months later before getting paid.

Whether you run a small business importing your first batch of private label products from overseas, or a multinational managing massive inventory globally every year, trade finance makes import and export transactions possible. .

That’s why at least 80% of global trade depends on trade finance, to keep goods flowing even when business owners don’t have the cash to fund transactions themselves.

How Trade Finance Works

It’s simple: a commercial intermediary – bank or other lender – supervises and facilitates the various transactions between the importer (buyer) and the exporter (seller).

The intermediary, for example the Co-operative Bank of Kenyawho offers trade finance solutions—intervenes to finance the transaction between you and the seller, whether in the country or abroad.

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Trade finance involves several different parties: buyer, seller, financier, insurers and export credit agencies. It also covers a wide range of activities, which often include:

● Letters of credit, sent to the seller’s bank by your bank, which guarantees that the seller will be paid if all the required documents are available to confirm that the goods meet the conditions.

● Commitment or tender bonds, which your bank issues as security to the bidding organization to confirm that you will sign the contract if it wins an advertised tender.

● Performance bonds, which act as a guarantee to the contracting party, once your bid has been accepted, that you will perform the contract.

● Guarantees, which include prepayment (secured by cash, property, treasury bills, etc.), credit and bank/immigration security guarantees that you will comply with import regulations.

● Commercial loans, such as LPO or contract financing, invoice discounting, pre-import/pre-shipment/pre-export financing and post-import financing

All of these solutions are designed to help you grow your business by providing you with the extra cash to invest in the assets you need to thrive.

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For example, if you are interested in binding bonds, Co-op Bank can give you binding unsecured bonds of up to KSh 20 million at 1-2% of the tender amount.

This is available if you are negotiating with businesses, government, NGOs or parastatals and you will receive the amount within 30 minutes of submitting your application.

What you need to get Co-op Bank business financing for your business

Accessing the above trade finance products from Co-op Bank is easy, as long as you submit the required documents, including:

● A completed application form

● A copy of the tender notice

● Your national identity card

● KRA PIN certificate and Tax compliance certificate

● Memorandum of understanding and statutes

● Certificate of Companies Registry (CR12)

● Bank statements (at least 12 months old) for other bank accounts held by your company or related companies

Once these documents are ready, you can be assured that Co-op Bank’s experienced trade finance team will review them and contact you with instructions on how to proceed.

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The bank has the best solutions to ensure that your business continues to win, no matter what stage it is at.

Check The range of trade finance solutions from Co-op Bank for importers and exporters who can help you conduct local and international transactions while facilitating the movement of goods and services and efficient trade.


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