Free Online Course in International Business
Knowledge Statement
Knowledge of Forms of Medium and Longterm Financing:
Governmentsupported Finance, Finance Provided by Banks and Financial
Institutions, and Lease Financing
Goal
The goal in this lesson is to introduce you to sources of medium
and longterm finance for an overseas buyer (internal/external) which
can offer a buyer extended payment terms while providing cash
payment to the seller without recourse.
Learning Objectives
You will be able to
• identify providers and sources of medium and longterm trade
financing
• identify medium and longterm financing tenors
• identify the role and function of the following:
• export credit agency financing
• multilateral organizations
• regional development banks
• credit insurers
• private sector financing
Introduction
Providers of medium and longterm financing such as ExIm Bank's
guarantees allow banks to finance buyers who would otherwise be
unable to get financing either in the United States or in their home
country because of the transaction size, risk, location of the buyer
and the debt servicing associated with this type of financing.
Mediumterm and longterm financing are available for capital goods or
services that have a useful life that extends beyond one year. A
creditworthy buyer who cannot get financing from a local bank may
find more favorable terms through ExIm Bank. These programs help
make international transactions more attractive for both a buyer and
a seller. ExIm Bank provides full payment to the seller, and the
buyer gets financing that would not be available otherwise, thus
allowing a transaction to move forward.
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