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So you’ve just opened up a new business making pre-fabricated, small-sized homes and your goal is to ship to customers throughout the world via your online website. How are you going to pay for some of the costs of goods to produce your homes for export?
This is obviously a challenge that many entrepreneurs face as they open up their products or services to global consumption. How will I pay for the initial costs to produce my product?
You can alleviate many of your worries if you utilize shipment finance for international trade. What is shipment finance? It is a transaction process by which a financial institution loans / finances your product so that you can manufacture and then ship it globally.
Some of its benefits include:
- Having cash-on-hand to purchase goods so you can get raw materials for your product (in the case of pre-fab homes, this would be crucial)
- Enables you to meet other costs associated with doing business (payroll, shipping, etc)
- Provides capital to keep growing your business
You’ll really only want to secure this type of financing if you have received an order you know is legit and is backed by documentary credit. It’d be no good if you took out a loan, built the home and then made shipment only to be conned by the buyer.
Have you ever taken out shipment financing for international trade? And, how have you secured such financing?