Asset brokers filling the void with purchase order finance

What’s the coolest piece of equipment you’ve ever financed? 

Unique, luxury or vanilla imported items in our industry often come with a flair of difficulty. Securing equipment finance once the goods have landed in Australia is most often never the issue.

How do you fund supplier payment to get the goods shipped in?

A typical scenario usually goes a little like this:

BROKER: I have a client that’s importing a machine from China and I’ve secured a NAB Equipment Finance facility. Problem is, NAB will only fund the goods once they’re in the country. The goods need to be paid before leaving China and it’ll just be a 3-4 week gap until NAB pays it out.

STAK: Does the client have any security other than just the transaction outline?

BROKER: The bank wants property security and they’ve got no equity. They can’t secure a term loan large enough and other import funders can’t get the insurance large enough to cover it.

STAK: Right, so you want us to fund the client based purely on goods being imported and the NAB Equipment FInance approval?

BROKER: Yes, I’ve tried every other lender and everyone wants either property and unsecured lenders simply won’t go that high.

STAK: Not a problem, we fund these types of transaction regularly with our product called “purchase order finance“.

Purchase order finance can be used for any imported goods either into Austalia or another country. It’s not always the case that you require takeout finance as described above.

How else can it be used?

Purchase order financing can be paired with a debtor finance facility. As goods are imported into the country and invoiced, trade drawdowns are repaid through financing the invoice related to the sale.

This gives the borrower up to 180 days before they need to make any repayments through to the end sale. This type of facility is often referred to as “back to back” or “self-liquidating”.

Are there any size restrictions?

Unlike other trade finance providers, Stak does not rely on third-party insurance underwriting such as a bill of exchange instrument.

This simply means that if the transaction stacks up we’re unlikely to cap the funding amount. We don’t need to seek approval from an insurer that also places covenants on lenders to force borrowers to make progress payments along the way.

If the borrower needs to make payments along the way then you’ve just identified that it’s not a true back-to-back facility. It’s simply a term loan dressed up as trade finance.

What if my client is importing goods without a takeout?

We’ve funded luxury yachts, precious metals, customs bonded items, trucks, race cars and aircraft without takeouts. If your client has the ability to pledge either first or second/caveats mortgages or contributing a large deposit towards the purchase we will consider funding.

Partner with Stak today and start offering a complete funding solution without restrictions.

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We regularly share our thoughts on trade finance, lending, company culture, product strategy and design.

Stak works with clients that sell to some of the largest buyers in Australia & overseas.

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