Pre shipment finance bridges the gap between landing an export order and receiving payment. Banks may lend against a confirmed order or letter of credit so the exporter can buy inputs and produce on time.
Key takeaways
- It is working capital tied to a specific trade cycle, not long-term factory investment.
- Lenders look at order quality, buyer risk, and the exporter’s track record.
- Once goods ship, post-shipment finance or discounting of export bills may take over.
- Delayed production or cancelled orders turn a short trade loan into a credit problem.