If you are planning to set up and run an international business, it is wise to have your financial sources sorted out thoroughly. Just like how you need to have a financial plan for setting up a restaurant, or even running an online business, international trade business too needs funding. But before we get to the international trade financing aspect, we have to understand the elements involved in the business.
What is international trade?
International trading is basically the import and export of goods and services between an individual or company in your country and the same party in a foreign country. Trade exists due to demand and supply quotient. When a buyer in another country wants to import something that a seller in a different country is selling, trade between the two parties is enabled. International trade gives access to markets of other countries from where you can source products which may not be available domestically, or is available for a cheaper price overseas.
Before foraying into this massive field, it is imperative to understand what are the documents in international trade. While initiating any trading transactions, the international market requires certain documents that need to be shown. There are several documents and each denote one aspect of the goods/services exchanged like the quantity, quality, description, transportation medium, inspection, indemnity etc. Hence, before engaging in an international trade transaction it is important that both the seller and buyer possess necessary documents to avoid the hassle of even a small error, which could prove extremely costly.
The importance of documents in international trade can be explained with a simple instance. When shipping the consignment if the seller produces the Bill of Lading – a document which proves that the goods have been shipped, the buyer will be assured that the seller has fulfilled the necessary steps and the goods will reach him/her safely. Similarly, an Inspection Certificate proves that the products shipped have been checked by the inspection officer and are up to the quality standards. This way the seller can be assured that the goods shipped to him are sans any fraudulence. This process is similar to a lender inspecting and evaluating your gold jewellery given as collateral why availing a gold loan.
Important documents in International trade
The following is a list of necessary documents in International trade and some of the most important ones explained briefly.
- Air Waybill
- Certificate of Origin
- Bill of Lading
- Combined Transport Document
- Draft (or Bill of Exchange)
- Insurance Policy (or Certificate)
- Packing List/Specification
- Inspection Certificate
An Air Waybill is typically a document in international trade that proves the goods have arrived and are ready to be shipped by air. There are 3 originals and 9 copies of the document which are signed by export agents and the air carrier. It is considered as a receipt for the goods being transported. The Air Waybill ideally serves as multiple things - a receipt for the consignment being shipped, an insurance certificate, an invoice for the freight and manual for the airlines staff on how to board, unload and dispatch the items.
Certificate of Origin
A certificate of origin is required by the customs department of the country importing the goods to decide upon import duty. This document is issued by the Chamber of Commerce of the origin country and primarily consists of the name and address of the exporter, number and description of the goods, seal of the chamber etc.
Bill of Lading
As mentioned in the example earlier, the Bill of Lading is proof that the consignment has been shipped from one destination to another. It is a document used in import and export business, where the shipping company gives the document and is signed by the carrier of the vessel. The Bill of Lading is handled very carefully and ensured it does not fall in the hands of any unauthorised persons.
Combined Transport document
Combined Transport document or Multimodal Transport document is issued when the goods need to be shipped through multiple modes of transportation. The contract of the combined transport operator for the consignment begins from the place of departure till the place of delivery. The combined transport document needs to clearly mention if the freight charges have been paid fully already or will be paid on delivery at destination port.
Bill of Exchange
A bill of exchange is a unique handwritten document raised by the exporter to the importer asking for a certain amount of money to be paid in the future and the importer also agrees. This kind of document is generally used in wholesale trading where a huge amount of money is involved.
How to finance an international trade business
Now that we know of all the important documents involved, the next step comes international trade financing. Setting up a trade business be it locally or internationally requires solid funding and trade financing is available at various levels since trade itself is a vast sector selling different goods and services. People who want to start a trade business generally seek trade loans. The eligibility criteria, loan amount granted, and loan tenure depends upon the discretion of each lender. However, approximately up to 10 crores can be sanctioned as loan amount depending on the type of trade business. While there are options of taking business loans import and export, the high interest rates on these loans could be an impediment in starting the business.
Gold loan as a better alternative
Taking a gold loan is a clever and advantageous alternative as opposed to taking a business loan as it involves a less complex documentation process with fast loan disbursals. It is also advantageous as it is a secured loan. A secured loan essentially means that an asset is pledged to the lender against the loan amount given. Since there is security for the borrowed amount, the interest rates are comparatively low. While there are many players in the gold loan lending market, it is important to research and analyse which company offers schemes that are suitable for your business with flexible repayment options. On those parameters, Rupeek is the most sought after gold loan company by many individuals and businesses for their capital requirements.
Why choose Rupeek?
Rupeek, one of the best gold loan companies in the market is known for its instant and cheap gold loans. By cheap we mean extremely low interest rates. Interest rates charged are charged directly proportional to the loan amount borrowed and hence it is important to seek a low interest rate for the amount borrowed. Rupeek offers interest rates starting at just 0.49%, making it a desirable lender for gold loans.
The notable fact about Rupeek gold loans is that there is no end-use restriction on the amount availed is an advantage. Which means the amount borrowed can be used for personal and business purposes. This allows you to set up an international trade business in a hassle free manner. Additionally, we offer flexible repayment options where the borrower can choose to repay the borrowed amount in monthly installments or repay as a single bullet payment at the loan tenure. You will only have to pay the applicable interest every month, in that case.
We provide loans ranging from an amount as small as Rs.15,000 up to 2 crore rupees to suit the customer’s financial needs. You can pledge the gold jewellery equal to the desired loan amount and use it to kickstart your trade business. Since the gold loan is secured, you will not have to worry about repaying high EMI. At Rupeek, you can opt for a gold renewal process with the same gold jewellery that you pledged for more loan amount! This extra liquidity can help fuel your trade business into a success.