A type of credit facility granted to the eligible current account holder. The borrower is allowed to issue cheques exceeding the credit balance in the current account but subject to a certain pre-approved limit granted by the financial institution.
A loan that has a specified repayment schedule and a floating interest rate.
Term loans have a maximum duration up to 10 years.
Trade Financing (MOL)
In addition to the working capital financing, financial institutions also provide financing for SMEs that involved in domestic and international trade. Some of the common trade financing facilities provided by financial institutions are as follows:
Letter Of Credit (LC) Or Documentary Credit (DC)
For import or local purchases of goods, materials or equipment.
– Issued by the buyer’s bank after the contract is concluded between seller and buyer.
– Seller consigns the goods to a carrier in exchange for a bill of lading.
– Seller gives bill of lading for payment from buyer’s bank.Buyer’s bank exchanges bill of lading for payment from the buyer.
– Buyer provides bill of lading to carrier and takes delivery of goods.
– Can assure payment is made to the beneficiary
– Able to obtain a lower purchase price of the goods and longer payment terms, as the LC provides an indication of payment assurance, from the sellers’ perspective
– Documents presented will be examined by trade financing specialists
– Do not have to communicate with the foreign seller so often since the whole transaction will be routed through and handled by the financial institution.
Extends credit facility on bills drawn under the financial institution’s own LC. As such, customers do not have to make immediate payments on the LCs.
A financing facility that enables a customer to accept delivery of their local/foreign purchases prior to payment of the sight bills being made by them.
– 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
Banker’s Acceptance (BA)
Financing of a bona fide trade i.e. export, import or domestic trade transaction.
– A draft (Bill of Exchange) drawn by customers to their order, payable on a specific future date and accepted by the financial institution for the purpose of financing a bona fide trade
– 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
Foreign Exchange Contracts (FEC)
Generally for businesses, with the following features:
– Regularly importing or exporting in foreign currencies
– Of a sizeable level
– With credit standing that is acceptable to the financial institution
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.
– The minimum amount of financing is RM50,000 and in multiples of RM1,000 (Bunching is allowed)
– Provides cash flow before proceeds for sale of goods on credit can be collected, or to finance purchases of raw materials for production
– Can always be sold at the prevailing market rate should the customer need immediate funds
– Provides two-way financing as BA financing is applicable for sales and purchases
Bills of Exchange Purchased (BEP)
As a means of working capital financing for exporters.
A facility provided by the financial institution for exporters, whereby the financial institution may purchase customers’ outward bills for collection and the customers’ account is credited immediately with the proceeds.
– 融资的最低金额为RM50，000 RM1，000的倍数（集束允许）