Export credit plays an important role in the export trade and national economic development of the providing country. It not only supports and expands the commodity exports of the providing country, but can also be used by the government of the providing country to improve and enhance the country's export commodity structure.

Main types of export credit

Export credit is generally used for the import and export trade of large machinery and equipment or complete sets of equipment, such as ships, aircraft, complete sets of equipment, etc. Export credit is an international credit method. It is a financing method that a country provides to its own exporters or foreign importers with lower interest rates in order to encourage its banks to provide exporters with capital turnover difficulties.

(1) Buyer's credit

Buyer's credit is a credit provided directly by banks or other financial institutions in the exporting country to the importer or the importer's bank by signing a loan contract. The credit limit is generally 85% of the contract amount, and the remaining 15% is the deposit. The deposit is 10% paid when the contract is signed, and an additional 5% is paid when the first delivery is made. The loan amount is paid by the exporter's bank to the exporter according to the delivery progress, that is, the exporter's bank provides a loan to the importer or the importer's bank.

The importer or the importing bank will repay the loan and interest from the exporting bank in installments within a certain period after all the ordered equipment has been paid, usually once every six months, and the interest will be paid at the same time. The reason why the exporting bank issues this kind of buyer's credit is mainly to support the export of complete sets of equipment. Buyer's credit is suitable for large-scale, complex export transactions with long credit periods, such as the export of capital goods, equipment and complete sets of design projects with large amounts and under long-term credit terms. Buyer's credit has the following main features:

1. Exports using buyer's credit require two contracts, one is the import and export contract signed by the buyer and seller, and the other is between the seller's bank and the buyer or buyer. Loan contract signed by the bank. The loan contract is based on the trade contract but is independent of the trade contract. Therefore, the procedures for buyer's credit are more complicated than seller's credit.

2. There is a clear dividing line between business and finance in export transactions. According to the buyer's credit arrangement, the export supplier only has commercial responsibilities, which is to provide high-quality products, ensure prompt delivery, and satisfactorily complete the factory construction and assembly tasks (if this is stipulated in the contract) tasks), ensure the normal operation of the equipment, provide guarantees, etc. Once the supplier fulfills these requirements, it has no further liability. Because the financial arrangements stipulated in the contract are the responsibility of the financial institution that provides the buyer's credit, that is, the exporter's bank.

3. Although the buyer's credit stipulates that the banks of the exporting country provide loans to foreign buyers or their banks, the funds are not allowed to be transferred from the exporting country to the importing country. The export bank functions according to the instructions of the buyer (or borrower) and pays the export supplier based on the delivery documents. This amount is the credit provided to the buyer as stipulated in the loan contract, and is repaid by the buyer according to the repayment date.

Legal Basis

"General Principles of Loans"

Article 10: Except for entrusted loans, when a lender issues a loan, the borrower shall provide a guarantee. Lenders should strictly examine the guarantor's repayment ability, the ownership and value of mortgages and pledges, and the feasibility of realizing mortgage rights and pledge rights.

If after loan review and evaluation, it is confirmed that the borrower has good credit and can indeed repay the loan, no guarantee is required.