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In addition to working capital financing, small and medium enterprises (SMEs) that are involved in domestic and international trade may also apply for related financing from financial institutions. Some of the common trade financing facilities provided include:
 
 
 
Usage
 
For import or local purchases of goods, materials or equipment
 
Features
 
A written undertaking by a financial institution to pay a seller a given amount of money subject to the following conditions:
 
On presentation of specified documents as set out in the terms and conditions of the LC
Within a specified time limit
At a specified place
 
Benefits
 
Assures payment is made to the beneficiary
Able to obtain a lower purchase price of the goods and longer payment terms
Documents presented will be examined by trade financing specialists

Less communication with the foreign seller as the whole transaction will be routed and handled by the financial institution
 
Usage
 
As a means of working capital financing for exporters
 
Features
 

Financial institution may purchase customers’ outward bills for collection and the customers’ account is credited immediately with the proceeds
 
Benefits
 
Able to obtain immediate funds upon presentation of necessary documents
Able to improve cash flow of the business since SMEs can obtain immediate funds from the financial institution
 
Usage
 
Extends credit facility on bills drawn under the financial institution's own LC.
 
Features
 
Enables a customer to accept delivery of their local/foreign purchases prior to payment of the sight bills being made by them.
 
Benefits
 
Enables the customer to pay the seller promptly
Enables the customer to take delivery of the goods without paying for it immediately
Able to ease cashflow
 
Usage
 
Generally for businesses that regularly import or export in foreign currencies with a credit standing that is acceptable to the financial institution
 
Features
 

The buying and selling of foreign exchange on a spot or forward basis, in respect of foreign proceeds or payments to be made at sight or at a future determinable date.
 
Benefits
 
Customers can fix their exchange rates for purpose of costing/hedging
No further exposure to exchange risk fluctuations especially in volatile markets
 
Usage
 
Financing of a bona fide trade such as export, import or domestic trade transaction.
 
Features
 

A draft drawn by customers to their order, payable on a specific future date and accepted by the financial institution

Minimum amount of financing is RM50,000 and in multiples of RM1,000
 
Benefits
 

Provides cash flow before proceeds for sale of goods on credit can be collected or to finance purchases of raw materials for production
Can be sold at the prevailing market rate should the customer need immediate funds
Provides two-way financing
 
Usage
 
Commonly used by exporters:
 

Exporters of products with a value added of at least 20% and uses a minimum of 30% domestic raw materials and not in Bank Negara Malaysia’s negative list

Direct exporters of eligible goods worth RM3 million per annum in the last financial year and RM3 milion in the preceding 12 months

Exporters of agriculture products worth RM1 million in the last financial year and preceding 12 months
 
Features
 

Administered by the EXIM Bank

Financing facilities available for Pre-shipment and Post-shipment
 
Benefits
 

Cheap source of financing exports
 
 
 
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For more information on trade financing or other financing products for asset acquisition,working capital and trade services , please download our booklet on SME - Financing Products For Your Business.