Tools and resources to help your company expand globally

Financing Operations

There are several options for your company to obtain financing related to trade transactions. Depending on your needs and the sales/buy cycle of your company, Santander Bank, N.A. (“Santander”) offers a wide range of tailor-made alternatives to help improve your working capital and cash flow.

Trade Loans

An Import or Export Line of Credit improves the working capital position of your company by financing the days payable outstanding (DPO) or days sales outstanding (DSO) of your international trade activity. They can also be used to finance time payments, days sales of inventory (DSI), and pre-export needs. It is a short term demand line to finance specific trade transactions for less than 364 days (usually between 90 and 180 days). In order to request utilization of this line, Santander must have evidence of the transaction with a pro-forma, commercial invoice, or sales contract.

Banker’s Acceptances Financing

A Banker’s Acceptance is a draft payable at a fixed future date, drawn on a bank, and accepted for payment by the bank. The discount of Banker’s Acceptance provides a short-term, fixed-rate loan used to finance the import, export, or domestic shipment of goods. Banker’s Acceptances are usually drawn under a Letter of Credit, but they can also be a “clean” Banker’s Acceptance if there is not an accepted Letter of Credit involved in the transaction. Consequently, you can finance imports or exports through clean Banker’s Acceptances if payments are made through Documentary Collections, wire transfers, or any other means of payment.

If your company is exporting under a Letter of Credit with deferred payment terms that have been accepted by your client’s bank, you may request Santander to discount the Banker’s Acceptance. This way, you can receive immediate payment for goods sold on time terms. It is an excellent way to provide attractive extended terms to your customers while still obtaining payment up front.

If your import or export transaction does not have a Letter of Credit in which Santander is involved, you may still find financing through a “clean” Banker’s Acceptance. Clean Banker’s Acceptance financing is usually less costly than other borrowing means, and is very easy to process. You can request funding by email by sending Santander a clean Banker’s Acceptance request with evidence of the transaction and details, and Santander will credit your account with the amount of the draft minus a discount fee. At maturity, your account will be automatically debited with the amount of the draft.

For Santander to provide you with clean Banker’s Acceptance financing, the transaction must comply with the following:

  • Be a trade transaction: The financing must be supported by the import, export or domestic shipment of identifiable goods to / from one or more parties
  • Duration: Drafts must mature in no more than 180 days and must be tied to the trade transaction. They may range between 30 and 180 days
  • Current Transaction: The creation of the Banker’s Acceptance must occur within 30 days prior to or after the shipment of goods.

Receivables Discounting

Receivables Discounting is a Supply Chain financing tool widely used to obtain working capital by selling accounts receivable that meet Santander’s credit criteria. Santander offers tailor-made solutions to achieve a true sale of receivables. With a Receivables Discounting program, your company will improve its working capital by accelerating debtors’ payments and mitigating the non-payment risk of your clients. With this program, you can provide better sales terms and improve your competitiveness. Santander can offer you customized Receivables Discounting programs on a disclosed or silent basis.

To request an accounts receivable discounting, you must provide Santander with copies of promissory notes, bills of exchange / drafts, invoices, or purchase orders.

Standby Letters of Credit

A Standby Letter of Credit is a written obligation of an issuing bank to pay the beneficiary on behalf of the applicant, in the event that the beneficiary claims that the applicant has failed to perform as specified in the terms of the Standby Letter of Credit.

Standby Letters of Credit enhance your promise of payment by making Santander secondarily liable to your creditors or customers if you are unable to fulfill your contractual or financial obligations. Standby Letters of Credit have varied applications to support both financial obligations and contractual performance, and can be advised and issued domestically and internationally using Santander’s extensive corresponding network.

  • Bid Bond: Ensures the buyer that the winner of the tender will fulfill the terms of the contract.
  • Performance Bond: Ensures the buyer will be compensated for the resultant loss, if the supplier defaults or fails in any way to carry out the contract.
  • Warranty Bond: Ensures the buyer after completion of the project.
  • Advance Payment Guarantee: Ensures the buyer is reimbursed the amount paid in advance if the seller fails to carry out his obligations.
  • Financial Guarantee: Guarantees payments.
  • Cross-Border Working Capital Facilities: Facilitates the approval of local financing for you overseas subsidiaries.

Government-backed Financing

Santander is a Delegated Authority Lender for both the Export-Import Bank of the United States Ex-Im Bank and the Small Business Administration (SBA) programs. Both agencies have special programs focused on promoting international trade for US companies, making it easier to achieve financing for specific trade transactions.

Ex-Im Working Capital Guarantee Program

The Ex-Im Working Capital Guarantee Program (WCGP) provides flexible financial assistance to help your company on the pre-export process. With the program, you will be able to secure financing to pay for raw materials, inventory, equipment, supplies or labor destined to produce goods for export, as well as export-related accounts receivable. It also covers the issuance of Standby Letters of Credit as bid bonds, performance bonds, or payment guarantees related to your export business.

Being one of the delegated lenders gives your company the opportunity to participate on the Ex-Im WCGP and the benefits that the program includes. This will provide your company with flexible financing for large export contracts, lower collateral requirements for issuance of Standby Letters of Credit, and generous advance rates for export-related accounts receivable and export-related inventory, including work-in-process; which will maximize your company’s borrowing base.

To be eligible to benefit from the Ex-Im WCGP, your company must be based in the United States, have more than one year of operating history, and have positive tangible net worth. The assets to export must be shipped from a US port to a foreign buyer, and have more than 50% US content based on all direct and indirect costs. If you use the WCGP to discount receivables, the sales terms should not exceed 180 days.

You can see additional information here.

SBA Export Loan Programs

The Small Business Administration has three programs specifically designed to help small companies develop and expand their exports.

  • Export Express Program: It provides credit of up to $500,000 to finance inventory, accounts receivable and export development activities.
  • International Trade Loan Program: It is available for companies that will develop or expand its exports, or for companies that have been negatively affected by import competition. You may use the proceeds to acquire, construct, renovate, modernize, improve, or expand US facilities and equipment to be used to produce goods or service that will be used to export.
  • Export Working Capital Program (EWCP): To make the export working capital available for your company, the SBA will provide Santander with up to $5 Million; 90% guaranty on short term loans for export. You can use this program to finance your working capital for the production of goods and services that will be exported, finance existing export receivables and inventory, or fund Standby Letters of Credit.

You can see additional information on this subject here.

Return to top