1. Seller's credit

1. Definition: Export seller's credit is a commercial loan provided by the exporter's bank to the exporter in this country. The exporter (seller) uses this loan as an advance payment, allowing the importer (buyer) to buy their own products and equipment on credit. Exporters (sellers) generally include capital costs such as interest in the export price and transfer the loan costs to importers (buyers).

2. Mode: A credit mode of deferred payment provided by exporters to foreign importers. Generally speaking, after signing an export contract, the importer pays a deposit of 5% ~ 10%, and then pays 10% ~ 15% in installments when delivery, acceptance and guarantee expire. The remaining 75% ~ 85% of the payment is obtained by the exporter from the exporter's bank during the equipment manufacturing or delivery. When the importer pays the balance and interest according to the deferred payment time stipulated in the contract, the exporter will repay the loan and interest payable to the exporter's bank. Therefore, seller's credit is actually a kind of commercial credit provided by exporters to importers after obtaining medium and long-term loans from exporters' banks.

Official support for export credit arrangements

3. Procedure:

① The exporter (seller) signs a trade contract with the importer (buyer) in the form of deferred payment to export large-scale machinery and equipment.

(2) Exporters (sellers) borrow money from local banks and sign loans to raise funds.

③ After the importer repays the exporter's payment with interest in installments, the exporter repays the bank loan.

4. The difference between seller's credit and deferred payment

① If the parties are different, the relationship between banks and industrial and commercial enterprises is under the seller's credit, and the relationship between industrial and commercial enterprises is under the deferred payment.

(2) the subject matter is different, the seller's credit is monetary capital, and deferred payment is commodity capital.

③ The nature of credit is different. The seller's credit is bank credit, and the deferred payment is commercial credit.

5. Features and advantages

① Compared with package loans, export bills, bill discounting and other trade financing methods, export seller's credit is mainly used to solve the cash flow difficulties faced by domestic exporters in delaying payment to sell large equipment or contracting foreign engineering projects. It is a medium-and long-term loan, usually with a large loan amount and a long loan term. For example, the export seller's credit granted by The Export-Import Bank of China can be as long as 10 years according to different projects.

② The export seller's credit interest rate is generally favorable. A country's discount with government funds can improve its export credit conditions, expand its product exports, enhance the competitiveness of its exporters in the international market, and then drive its economic growth. Therefore, the interest rate of export credit is generally lower than the market interest rate of capital borrowing under the same conditions, and the spread is subsidized by the government of the exporting country.

③ The issuance of export seller's credit is combined with export credit insurance. Due to the long term and large amount of export credit loans, card-issuing banks face greater risks. Therefore, in order to encourage a country's banks or other financial institutions to issue export credit loans, a government will generally have a national credit insurance institution to guarantee the export credit issued by banks or to underwrite the commercial risks and national risks faced by exporters when performing contracts. In China, China Export Credit Insurance Corporation mainly underwrites such risks.

Second, buyer's credit.

1. Definition: Export buyer's credit means that the government of the exporting country supports the exporter's bank to provide credit support directly to the importer or importer's bank, so that the importer can purchase technology and equipment and pay related expenses. The export buyer's credit is generally provided by the export credit insurance institution of the exporting country. There are two main forms of export buyer's credit: first, the exporter's bank lends money to the importer's bank, and then the importer's bank lends money to the importer; Second, the exporter's bank directly lends money to the importer, and the importer's bank issues a letter of guarantee. The currency of the loan is USD or other currencies agreed by the bank. The loan amount shall not exceed 80-85% of the trade contract amount. The loan term depends on the actual situation, generally not exceeding 10 years. The loan interest rate depends on the interest rate level determined by the Organization for Economic Cooperation and Development (OECD).

2. Method: The exporter's bank directly provides loans to the importer, and the contract signed between the exporter and the importer stipulates that the payment method is at sight. According to the contract, the exporter's bank will pay the exporter with the delivery documents provided by the exporter. At the same time, it will be credited to the importer's compensation account, and then the importer will repay the loan to the exporter's bank one after another according to the payment time agreed with the bank, and pay interest. Therefore, buyer's credit is actually a kind of bank credit.

3. The procedures and practices of this kind of buyer's credit are:

① After the importer (buyer) signs a trade contract with the exporter (seller), the importer (buyer) pays a cash deposit equivalent to 15% of the price of the goods. The cash deposit shall be paid on the effective date of the trade contract or 60 or 90 days after the contract is signed.

(2) After the signing of the trade contract and before the advance payment, the importer (buyer) signs a loan agreement with the bank where the exporter (seller) is located. This agreement is based on the above-mentioned trade contract. If the importer doesn't buy the equipment from the exporting country, the importer can't get the loan from the exporter's bank.

(3) The importer (buyer) pays the loan to the exporter (seller) in the form of cash payment.

(4) The importer (buyer) shall pay the arrears of the bank where the exporter (buyer) is located in installments according to the terms of the loan agreement.