As per the study done by World Economic Forum, Trade Finances is one of the top 3 obstacles for traders globally. But for them, access to Trade Finance Facility is very crucial for their success. Usually, in import export transactions, sellers want payment before shipment; while buyers want to pay, once they receive goods. To solve these trust issues; Bank Instruments have been used. Since access to financial instruments is limited for SMEs, they often cancel the deals; if they can’t able to get financial support from their banks.
What is Trade Finance Facility?
Trade Finances plays a vital role in assisting traders to do business globally without facing any financial hurdles. Further, it covers an umbrella term by including a wide range of Bank Instruments such as – Letter of Credit, Standby LC, BG MT760 & Comfort Letter. All these Financial Instruments assist traders to reduce the risk of payment and supply of goods; by introducing a third party called Banks, as a guarantor.
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Why there is a Large Gap between Trade Facilities & SMEs?
Only a small part of the import is paid in advance and the rest, nearly 80% of world trade tends to occur by using Bank Instruments. Also, on the other hand, SMEs play a major role in a global economy (nearly 96%); so the rejection of Financial Instrument requests will directly affect the world’s market.
When we analyze the gap between the Trade Facilities and SMEs; the main reasons can be – lack of credit score, lack of credit history; as well, lack of cash funds to provide a cash margin. These 3 are the main demands of the banks which traders, mostly, SMEs can’t able to fulfill these banking norms. Hence, this is the reason behind the rejection of their request.
However, when we think about the quick ways to close the financial gap; there is no panacea for traders; apart from getting help from private Trade Finance Providers.
How Trade Finance Providers Helps to Bridge the Trade Finance Gap?
If the banks declined your request to avail bank instruments; then there are two options left for you – Either you can step out from the deal; or else you can get help from Bank Instruments Providers in Dubai.
Usually, the provider of trade finances has strong tie-ups with good repute banks. Further, this helps them to extend their support to traders to assist them with their import export finance needs.
To get the right support for your import & exports, you can get help from us. We at Bronze Wing Trading can help you to get the Bank Instrument at ZERO Cash Margin; which makes it easy for you to conclude your deals on time. Also, we can support traders by providing Trade Finances in Dubai & anywhere in the world.
Contact us now to see how we assist traders to bridge the gap in trade finances!
