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How Trade Finance is Helping Small Businesses to Grow Fast

Updated: Jun 28, 2022

Trade Finance offers a solution for bridging the financing gap between paying exporters upfront and importers receiving and selling the goods in question. Being an efficient financial facility, allows small businesses to boost their cash flow in this paradoxical situation, helping them to achieve a more comfortable level of liquidity needed for expanding their business.

Whether your capital is tied up in invoices waiting to be paid or you need additional security when trading with international companies, Trade Finance can provide a great solution for your business as well. Here are just some of the many ways this financing option can help your small business grow quickly and steadily:

Financing your vendors

Your small business is growing and the demand for your products and services is constantly rising. Although this is a positive aspect of building a business, your inventory levels are likely depleting and the available cash you have simply won’t be enough to meet the increasing volume needed to meet the demand. On top of that, your foreign suppliers might also be asking for payment before shipment. Trade Financing is the ideal solution in this situation, particularly if you’re not eligible for a bank loan or can’t acquire a large enough loan. Trade Finance solutions will give you the opportunity to pay all your suppliers in advance, thus preventing late payments and empowering you to continue doing business without any cash flow difficulties.

Financing your inventory

If you are a wholesaler, your company might see an increase in sales each year, in part due to the longer payment terms that your business extends to its retailers. But overextending your cash reserves to this extent can also make it increasingly challenging to keep up with the new orders. Reducing the payment terms is likely not a viable option, as you wouldn’t want your retailers to search for new suppliers. As long as your business deals in goods that have a liquid and large market, Trade Financing institutions could also provide financing against your standing inventory. This represents a simple way of receiving continuous regeneration of working capital, allowing you to accelerate your growth trajectory while maintaining beneficial current relationships.

Empowering you to go global

This financing option also gives you access to a convenient, revolving line of credit that allows you to pay both local and international suppliers without the common cash flow challenges. When you choose the best Trade Finance solution, you will be able to set your own trading terms, receive custom facilities based on the needs of your business, and even utilize modern digital platforms to track and manage your supply chain in the process. Not only will this provide you with the opportunity to diversify your funding options and close your working capital gap, but it will also give you the power to partner with only the best, most suitable suppliers for your company, thus encouraging you to grow, expand, and go global.

Avoiding the struggle of banks

When a small business approaches a bank or any other financial institution for capital, they are always required to provide some form of additional security. If companies are growing and have opportunities for filling orders, they might not always have that extra security available. Trade Finance, on the other hand, allows businesses to secure the necessary funds without the need to put up their assets as a consequence. It focuses on the transaction itself, as well as the client and their balance sheet, rather than different forms of security that aren’t necessarily tied to the transactions. This means that businesses can always get Trade Financing, as long as they can acquire and sell goods, and make a profit.

Offering currency protection

With suppliers being located all over the globe, Trade Finance can provide more predictability and security in currency when dealing in international trade. By managing entire transactions from beginning to end, this applies both in instances when trading is only done between two currencies and between multiple countries and currencies. Most Trade Finance lenders will offer financial facilities in a number of different currencies, thus eliminating all currency exchange risks upfront. As a result, this will provide your company with more flexibility and speed, opening it up to the global market in the process.

Keeping things simple

After all, busy business owners and leaders simply want to run their companies; they would rather not be delayed and hindered when exploring different financing options. If that is the case with you as well, it’s important to remember that Trade Finance lenders tend to have significantly quicker and simpler application processes compared with most traditional banks. If you are able to acquire and sell goods, Trade Finance solutions will allow you to pay for them. That means your business will only continue to grow and evolve, and that is practically as simple and straightforward as things could get.

Capital is truly necessary for the growth and expansion of a business. Whether you need it to extend payment terms, build inventory, increase production, or even go global, Trade Finance can always offer the perfect solutions for the requirements of your small business.

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