Trade Finance

Trade Finance is a product or service offered by a 3rd party (Normally a Bank) that actively intermediates a commercial transaction flow to provide short term working capital and/or mitigate the commercial risk to the seller and/or buyer.

Trade Finance

The two key features of Trade Finance:

  1. Risk mitigation
  2. Provision of working capital finance

 

Trade Finance Products Includes:

  1. Letter of Credits.
  2. Guarantees.
  3. Invoice Discounting.
  4. LPO Financing.
  5. Contract Financing.
Letter of Credits

This is an irrevocable arrangement that constitute a definite undertaking issued by the bank on behalf of the buyer in favour of the seller/supplier to honor a complying presentation. In other words, the importer’s bank is guaranteeing the exporter the payment upon shipment of goods to the importer and presentation of complying shipping documents to his bank.

 

Requirements.

  • Sales contract/profoma invoice between buyer and seller. (Describing their agreements, terms and conditions)
  • Application letter
  • Board Resolution
  • Other Credit requisite documentations.
 

Eligibility

  • For a customer to qualify, there must be an underlying Import letter of credit or import collection documents.
  • The customer must have a pre-approved limit.
  • The facility must be full secured by some acceptable bank collaterals.
 

Benefits:

  • Provides additional working capital with flexible security requirements
  • Cheaper than other borrowing facilities and can be used on a revolving basis
  • Enables taking of very large orders.
Guarantees

The bank issues all types of Bank Guarantees i.e

  • Unsecured Bid Guarantees
  • Performance Guarantees
  • Advance Payment Guarantees
  • Bank Guarantees
  • Suppliers Guarantees/ Payment Guarantees


Features

  • Maximum tenor, depending on customers contract period.
  • Security is the acceptance of the drawee’s bank.
  • Provides guarantees by the 3rd Party (A bank).
  • Off balance sheet in nature.


Eligibility

  • For a customer to qualify, there must be an underlying contract/tender awarded or Tender to Bid.
  • The customer must have a pre-approved limit.
  • The facility must be full secured by some acceptable bank collaterals.


Benefits

  • Provides additional working capital with flexible security requirements
  • Meeting the tender or contractual requirements in submitting instruments against performance of the contract or advance payment of the contract or being supplied by materials.
  • Cheaper than other borrowing facilities and can be used on a revolving basis
  • Enables taking of very large orders.

 

 

Trade Loans

We provide working capital solutions by issuing LPO Financing, Contract Financing and Invoice Discounting.

Key Features

  • The product has a maximum tenor of 90 days depending on the term of the LPO/Invoice.
  • Flexible security requirement depending on the integrity of the drawee and the tenor.
  • Maximum discount amount 70% of LPO/Invoice value
  • The facility is self-liquidating.


Requirements / Eligibility

  • Bank customer with proven track record.
  • An approved LPO/ Confirmed invoice from reputable institutions.
  • Letter of assignment of accounts receivables with recourse.
  • An undertaking to pay Access Bank directly by the drawee/off-taker


Benefits

  • Immediate access to the proceeds of sales
  • Simple operational procedures
  • Cheaper additional working capital
  • Simplified security requirements

 

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