2 Access to finance

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2 Access to finance

  1. 1. Presented by Stephanie Diakité, CATEK Oct. 31, 2010 – USAID-SIAO Seminar Series Ouagadougou, Burkina Faso
  2. 2. Pre-export Daily Operations Business Development
  3. 3. SHORTTERM FINANCING TIEDTO ORDERS MIDAND LONGTERM FINANCING . TIEDTO BUSINESS STRATEGY
  4. 4. BASIC EXPORTTRADE FINANCE PRODUCTS Letters and Lines of credit Advances Loans
  5. 5. ADVANCE Example – client advance to acquire raw materials for processing LOAN Example – commercial loan to acquire and install processing equipment
  6. 6. Revocable letter of credit LC can be revoked by the issuing bank without the agreement of the beneficiary. Irrevocable letter of credit Cannot be cancelled or amended without all the parties agreement. Standby letter of credit Guarantee of payment. If the beneficiary does not get paid by its customer, it can then demand payment from the bank by forwarding a copy of the invoice that was not paid and supporting documentation. Revolving letter of credit It is established when there are regular shipments of the same commodity between supplier and customer. Eliminates the need to issue an LC for each individual transaction.
  7. 7.   • Lump sum of money • Repayment by installments over a defined period of time (capital + interest)Loan • Maximum amount of money available • Can be used as needed • Repayment is flexible (capital + interest) • Capital reimbursed becomes available for use Line of credit LOANS AND LINESOF CREDITARE DIFFERENT!
  8. 8.  Traditional Channels  Customers  Commercial banks  Developmentbanks  Specialized public services  Equity partners  Other Channels  Savings and loan cooperatives and associations  Microcredit organizations transitioning to savings and loan organizations  Personal and/or professional contacts and acquaintances
  9. 9. Buyers and pre-export suppliers needs assurances before they will advance funds on purchasing or supply Banks and other financial institutions require hard and soft guarantees of recovery
  10. 10. TRUST TRACK RECORD CAPACITY HARDAND SOFT GUARANTEES
  11. 11. Work with and through recognized industry channels Work with financial institutions that know your industry Get in the financial services loop Use financial instituitons that have guarantee and/or special lending programs
  12. 12. Transparency and good governance are key Reinvesting in your business will enable you to grow Opening your capital to partners with capacity you have not yet build is a financing option Submit clear, credible applications for financing
  13. 13. Start ups need not apply is very prevalent. Until you have a track record, you may have to depend on advances and informal lending channels. Document your successes! Build a financial services history BuildingTrack Record
  14. 14. Prevailing regulations require hard guarantees up to and often exceeding 100% Negotiate contract security with your purchasers Tap into development guarantees Domicile receivables
  15. 15. Application letter (or form) Synopsis of the business plan DocumentationBusiness Plan PROMISING FINANCING APPLICATION
  16. 16. Background,experience and market Projected sales for the fianancing period Conditionsof sale Financingneeds for the period Projected financial results Practicalmeasures for re-payement of the financing Annexes – Sales contracts and letters of intent,Guarantees
  17. 17. Presentation of the Business Products and Services Existing Resources Short, mid and long term projects Expected results
  18. 18. Learn more about the USAID West AfricaTrade Hub project at www.watradehub.com Stay in touch with all of our activities and results: Subscribe to the USAID Trade Hub project newsletter, Tradewinds. Send an email to info@watradehub.com or simply enter your email address on the website!

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