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Introduction
Packing loan refers to a special loan issued by Bank of China at the request of the beneficiary of L/C (exporter) to finance their purchase, production and shipment.
Functions
1. Satisfaction of the exporters' requirements of short-term financing for goods preparation and shipment under L/C.
2. Source of repayment comes from foreign exchange earnings from export under L/C with conditional credit guarantee by the issuing bank.
3. It belongs to special loans with a clear trade background. The closed management is applicable to the product.
Features
1. Expansion of trade opportunities. It can help exporters to run business smoothly and seize trade opportunities in the event of shortage of capital and failure to satisfy the requirements of advanced payment.
2. Reduction of tied up capitals. It alleviates pressure of working capital because exporters' own capital will not be occupied during lead time for purchase, production and so on.
Interest Rate
Financing interest rate is in accordance with the authorization of Bank of China for the trade finance interest rate.
Target customers
Exporters are in shortage of working capital while overseas importers disagree with payment in advance but agree to open an L/C.
Application Qualifications
1. The business license of enterprises legally approved, registered and annually checked and other valid certifications sufficient to prove the legitimacy and scope of its operation;
2. Loan cards;
3. The account opening permit and a settlement account with Bank of China;
4. The qualification of import and export operation;
5. A credit line in Bank of China.
Required Documents
1. Written application;
2. Overseas sales contract and domestic procurement contract;
3. Trade orientation;
4. Original copy of L/C.
Process
1. The exporter shall sign the financing agreement with Bank of China and submit application for packing loan, trade contract, original copy of L/C and other pertinent materials.
2. The packing loans shall be transferred to the exporter's account after bank's approval.
3. The exporter shall submit documents under L/C to Bank of China after completion of purchase, production and shipment with the packing loans.
4. Bank of China shall send out the documents to the overseas bank (the issuing bank or designated bank) for reimbursement.
5. Bank of China shall recognize the repayment of packing loans when the overseas bank makes due payments.
Kind Reminder
1. The exporter is required to sign a formal Loan Agreement (Packing Loans) with Bank of China;
2. The financing bank shall be the advising bank of L/C who is entitled to negotiation and acceptance;
3. It is strongly recommended that the L/C does not contain "soft clause" which the exporter can not fulfill;
4. The original copy of L/C shall be filed with the bank after applying for packing loans;
5. With normal conditions, the received remittance under L/C shall be the primary source of repayment of packing loans;
6. Upon shipment of cargoes and obtaining documents under L/C, the exporter shall present the documents to Bank of China in time.
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