ITC Launch Trade Finance Guide For SME Importers And Exporters

A guide for SME importers and exporters has been launched by The International Trade Centre (ITC) and partners at the SME Finance Forum with a purpose to help small and medium-sized traders learn about and facilitate finance for trade. The guide is co-authored by TFG, ITC, the Federation of Small Businesses (FSB), Institute of Export & International Trade (IOE & IT), the British Exporters Association, Forum of Private Business (FPB), and The International Finance Corporation (IFC).

As per the guide, trade finance is, “The financing of goods or services in a trade or transaction, from a supplier through to the end buyer.” The guide is focused on helping SMEs witness the available facilities to recover from COVID-19 and to respond to current orders, Deepesh Patel, TFG Editorial Director, said. 

Trade finance represents 3% of global trade while it is worth around USD 3 trillion every year. Also defined as supply chain finance and import and export finance, trade finance can be covered in an umbrella term including a variety of financial instruments being utilized by importers and exporters. 

The guide titled, Trade Finance Explained: An SME Guide for Importers and Exporters, consisting of different types of trade finance structures available to small importers and exporters. For example, trade credit, cash advances, purchase order finance, receivables discounting, term loans, and other types of business finance including equity finance, leasing, and asset-backed finance, and asset finance. The guide will also help SME traders understand several methods of payment, including cash advances, letter of credit, documentary collections, and open accounts. It highlights the suitability of each method to be executed as per the business requirements. The guide covers product, manufacturing, transport, and currency risks and challenges, and outlines accessing trade finance from different lending sources.

The guide also focuses on the impact of the COVID-19 pandemic on SMEs access to trade and export finance. Within this context, the guide includes several opportunities to help SMEs overcome the impacts of the COVID-19 pandemic. Trade-in some markets and sectors are rising with levels at or above those of the same period in 2019, it covers.

ITCs Senior Adviser on Access to Financing, Ian Sayers, reflected the fact that trade finance has been considered as the business of international buyers. Commenting on the guide's release, he further adds, “it is time for SMEs to realize its potential to help them pivot into new markets, get new certifications, expand their workforce and make sustainability improvements. The short-term nature of trade-related financing matches SMEs current needs and business horizons - especially now when the future continues to be uncertain”. He showed his hope in regard to the guide saying that it will revive SMEs keenness to access locally available trade-related financing facilities. 

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