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International Commercial Financing

International Commercial Financing is financing or funding businesses or any other commercial activity on an international level. It is basically done by banks and financial institutions which have been in the business of commercial banking for quite some time. International financing is slightly risky because of the fluctuating interest rates due to the ever so uncertain global market conditions, the long geographical distance between the buyer and lender and the inconsistent global rules for financing. What applies to one country might not necessarily apply to another country as well.

Now let us look what are the things that could be kept required as collateral to obtain that commercial loan:

1. Fixed assets: If you have some assets of good value, you can use them to be mortgaged with the bank for obtaining the loan.

2. Un-received cash: When you are making credit sales, there is a risk of liquidity in your business. The money for goods that you have sold might have not been received from your customers as yet. This brings a friction in the cash inflows. But you must be having the receipt for the sales. You can use that receipt as collateral in a bank if you want to finance some money for your business from external sources.

3. Work In Progress: You are probably going through a rough phase in your business and you are not finding a way to get your inventory out and convert them into sales. You might be thinking of getting into another business or diversifying your business. But do not have that much needed cash to start the new venture. Under such circumstances, you can keep your unsold inventories as collateral with the commercial bank and get your loan.

4. Business plan: Every bank looks to finance an entrepreneur who is more strategic and methodical in his way of doing or starting up a business. One way of proving your commitment to the banks towards the business is through by preparing a well defined business plan. A plan which clearly states what your business, your goals, vision, mission and objectives of the business. Mention how you look at the growth of the business ten or fifteen years down the line. What is the cost of the total venture and what are the scopes of succeeding in the business and what is the kind of profits that you are trying to make with the business. If you put all these details in a document and present to your commercial bank, they would be very impressed, as it would reflect a very committed and sincere character of yours, and make the financing process much quicker. You would probably not even need collateral then. In case you are not familiar with making business plans, hire an experienced professional.

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