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Export Supplier's Credit


 

Introduction

Export supplier's credit is a medium-and-long-term financing facility provided by export country banks to the exporter. The purpose for the export country is to promote its export of capital goods and services, such as homebred mechanical and electrical products, complete equipment and overseas contracted engineering projects. Loans granted should not exceed the balance of total export costs minus down payment and self-raised funds.

Features

1. For the exporter, on the one hand, exporter's financing channels are expanded, and on the other hand, the financing costs of export supplier's credit under ECA items (insurance, guarantee or direct financing) are much lower than that of average commercial loans. Because the business objectives of export countries' ECAs is to implement national policies rather than to make profits and thus the premium rates (or the rates of guarantee) and the loan interest rate are always lower than the market average.

2. Compared with export buyer's credit, the export supplier's credit requires that the lender and the exporter are in the same country, which leads to an easier operation.

Currency Types

RMB or USD.

Term

From the date of loan contract signing to the date of repaying the loan principal and interest, no more than ten years (including the grace period).

Interest Rate

In accordance with the relevant rules by the People's Bank of China and Bank of China.

Target Customers

The target customers of export supplier's credit should be legally registered export-import enterprises or manufacturers that are qualified to engage in export of mechanical and electrical products. Export supplier's credit is applicable to financing transactions for complete equipment, watercrafts as well as other mechanical and electrical products, whose contract value should be more than USD 0.5 million and payment method should more than one year deferred payment.

Application Qualifications

1. The borrower should have well-organized operation and management, good standing of finance and credit, ability to implement export contracts, reliable repayment guarantees, and an account of Bank of China;

2. The export items should meet relevant national policies, borrower's legal business scope, have effective contracts after examined and approved by relevant authorities;

3. The export items have good economic return, reasonable cost of foreign exchange conversion, and supporting conditions in position;

4. The commercial terms in contract should be approved by Bank of China prior to contract signing;

5. The importer with high credit should be able to provide Bank of China with an acceptable repayment guarantee from an overseas bank or elsewhere;

6. In principle, the export contract should have been conducted with export credit insurance;

7. The borrower should provide an acceptable repayment guarantee to Bank of China generally;

8. If the borrower has successfully obtained foreign currency loan, it should ensure that the loan can be repaid appropriately.

Required Documents

1. Loan application (including a brief introduction to the borrower, loan amount, currency, term, usage, repayment sources, repayment guarantee, usage/repayment plan etc.); for a joint-stock company, a resolution of board of directors on consent of loan application and a power of attorney is required; for the first loan application, the borrower should provide the Articles of Association and certificate of paid-in capital;

2. The business license that has undergone annual verifications; financial statements of the past three years and the loan card;

3. A approval instrument granted by relevant authorities (including the approval documents required in import business with foreign exchange loan);

4. Duplicates of the related commercial contracts (including export contracts, contracts for domestic purchase and import contracts with foreign exchange loan);

5. Projects' basic information and its analysis report on economic return;

6. A deferred payment guarantee issued by the import bank (namely irreversible L/C or letter of guarantee);

7. The letter of intention of export credit insurance issued by an insurer and a certificate representing that borrower agrees to repay the loan by the compensation of export credit insurance;

8. Relative documents for guarantee (including but not limited to the ownership certificates and evaluation reports of the guaranties/pledges, and business licenses of guarantor, copies of financial statements and letter of intention of guarantee);

9. Other documents required by Bank of China.

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