Overview

Packing Credit is a short-term financing facility provided by banks to exporters. It supports exporters by allowing them to obtain funds needed to manufacture, pack, and ship goods intended for export. This credit is typically granted after an export order has been confirmed but before the actual shipment takes place.

Benefits for Exporters

• Improved Cashflow: Packing credit helps exporters manage their cash flow more effectively, allowing them to fulfill orders without upfront capital.
• Competitive Advantage: Timely access to funds, Exporters can meet deadlines and grab new oppurtunities.

Types of Packing Credit to Exporters

• Pre-shipment packing credit: provided to exporters for financing the production and packing of goods before shipment.
• Post-shipment packing credit: It is provided after the goods have been shipped but before payment is received from the buyer.
• Export credit with letter of credit: Packing credit can be linked to a letter of credit issued by the importer's bank, ensuring payment.
• Export credit without letter of credit: This is granted based solely on the export order or contract without an letter of credit.
• Working Capital packing credit: It focuses on providing working capital for exporters who require funds to manage ongoing operations.
• Term packing credit: It offers a longer duartion compared to typically packing credits, often linked to specific projects or larger orders.
• Revolving packing credit: A facility where the exporter can withdraw and repay multiple times within the sanctioned limit.
• Project based packing credit: It often requires detailing documentation and planning.
• Government-supported packing credit: Some countries offer packing credit schemes with government backing to promote exports.

Overview

A finance lease is a contractual arrangement where a lessee obtains the right to use an asset for a specified period in exchange for regular payments, effectively treating the lease as a purchase of the asset. The lessee assumes most of the risks and rewards of ownership, even though the legal title may remain with the lessor

Key Features

• Ownership Transfer: At the end of the lease term, the lessee usually has the option to purchase the asset at a predetermined price.
• Long-Term Commitment: Finance leases are typically longer in duration compared to operating leases, often covering most of the asset's useful life.
• Financial Reporting: In most accounting standards, finance leases are recorded as assets and liabilities on the balance sheet, reflecting the lessee's right to use the asset and the obligation to make lease payments.
• Tax Implications: The lessee may be able to claim depreciation and interest expenses, potentially providing tax benefits.
• Usage Rights: The lessee has the right to use the asset as if they own it, including the responsibility for maintenance and insurance.

Benefits of a Finance Lease

• Cash Flow Management: Lessees can acquire assets without a large upfront payment, which can help manage cash flow and invest capital elsewhere.
• Access to Upgraded Technology: Businesses can lease the latest equipment, allowing for upgrades as technology advances.
• Tax Benefits: Lessees can often deduct lease payments as business expenses, and depending on the jurisdiction, they may also claim depreciation on the asset.
• Balance Sheet Impact: The asset and corresponding liability appear on the balance sheet, which can impact financial ratios and leverage calculations.
• Risk Mitigation: Lessees can mitigate the risks associated with asset ownership, such as obsolescence or maintenance costs.

Overview

Pre-sanction is a crucial stage in the application process where lenders assess the borrower's eligibility and the viability of the loan request. The pre-sanction phase is vital for both the borrower and the lender. It helps the lender assess the risk involved in lending and gives the borrower an idea of their eligibility and the potential for loan approval.

Documents Required

Pre-sanction loan documentation is crucial for the evaluation process before a loan is approved.

• Loan Application Form
• KYC documents:
  Identity proof alike, Pan card, Aadhaar.
  Address proof alike, utility bills, rental agreements.
  Business registration documents.
• Financial documents
• Project report or business plan
• Credit history report
• Bank statements
• Collateral documents
• Ownership documents
• Affidavits
• Authorization letter

Overview

Post-sanction loan documentation is essential to finalize the loan agreement and facilitate the disbursement of funds. Post-sanction documentation is critical for formalizing the loan agreement and ensuring compliance with the lender's requirements.

Documents Required

• Loan Agreement
• Sanction letter
• Security documents
• Post-dated cheques
• Declarations
• Insurance documentation
• Utlization certificate(for cash credit)
• Account opening form
• Board resolution(for companies)
• Legal compliance documents