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  Bank of China >> BOC UK >> Corporate Banking >> Trade Services >> Trade Finance

Packing Loan


 

Product Name

Packing Loan

Product Description

A special loan offered by the local bank to the exporter who has received qualified letter of credit, to be used under items of procurement, production and shipment, so as to support the exporter to implement the contract, effect delivery as scheduled. Packing loan is a pre-loading short-term financing, which enables the exporter to purchase, prepare the material, produce and trade without difficulty even the self-owned capital is not sufficient.

Product Functions

1. Satisfaction of the exporters' requirements of short-term financing for goods preparation and shipment under L/C.

2. Source of repayment comes from foreign exchange earnings from export under L/C with conditional credit guarantee by the issuing bank.

3. It belongs to special loans with a clear trade background. The closed management is applicable to the product.

Product Features

1. Expansion of trade opportunities. It can help exporters to run business smoothly and seize trade opportunities in the event of shortage of capital and failure to satisfy the requirements of advanced payment.

2. Reduction of tied up capitals. It alleviates pressure of working capital because exporters’ own capital will not be occupied during lead time for purchase, production and so on.

Eligible Applicants

Exporters are in shortage of working capital while overseas importers disagree with payment in advance but agree to open an L/C.

Application Requirements

1. The business license of enterprises legally approved, registered and annually checked and other valid certifications sufficient to prove the legitimacy and scope of its operation;

2. The qualification of import and export operation and real trade background;

3. A credit line in Bank of China.

Required Documents

1. Written application;

2. Overseas sales contract and domestic procurement contract;

3. Trade orientation;

4. Original copy of L/C.

Application Procedures

1. The exporter shall sign the financing agreement with Bank of China and submit application for packing loan, trade contract, original copy of L/C and other pertinent materials.

2. The packing loans shall be transferred to the exporter's account after bank's approval.

3. The exporter shall submit documents under L/C to Bank of China after completion of purchase, production and shipment with the packing loans.

4. Bank of China shall send out the documents to the overseas bank (the issuing bank or designated bank) for reimbursement.

5. Bank of China shall recognize the repayment of packing loans when the overseas bank makes due payments.

Gentle Reminder

1. The exporter should sign formal “Loan Contract (Packing Loan)” with BOC London.

2. BOC London should be the advising bank and the nominated bank of the letter of credit and it can negotiate and pay.

3. “Soft clauses” that the exporter has no way to fulfill shouldn’t be included in the letter of credit.

4.  After application of packing loan, the original letter of credit should be retained in BOC London.

5.  In normal cases, the received payment from the issuing bank should be deemed as first resource to repay the packing loan.

6.  Upon shipment and obtaining documents under letter of credit, the exporter should present the documents to BOC London as soon as possible.

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