Citi Bank

Summary

Trade finance refers to a local currency loan program by which pre-shipment working capital is supported to local export company and exporting goods manufacturing company so that they can secure goods for export (including services for export) or raw material.

Eligible Companies

- There is no restriction in terms of corporate size with a few exceptions as below.

- Companies belonging to the top 30 business groups as prescribed in the Bank Supervision Regulation, Article 62, Paragraph 1.

- Companies classified as the “Red Flag Customer” as per the Agreement on Credit Information Exchange and Administration of Financial Institutions.

- When Korea Federation of Small and Medium Business or Business Corporative as prescribed in Act on Korea Federation of Small and Medium Business has borrowed from Joint Business Fund Korea Federation of Small and Medium Business, they are not eligible for trade finance.

Characteristics and Scope of Trade Finance

Classification of Trade Finance

Export Procedure and Its Relationship with Trade Finance

Comparison of Handling Method of Trade Finance

Type	Finance Based on L/C	Finance Based on Actual Exports
Definition	Financing method based on export letter of credit held by the company on a transaction by transaction basis	Financing method based on the actual export or eligible actual exports of the company in the past
Eligibility	Person who has evidence of eligibility	Person who has actual exports for a certain period
Benefit	Inconvenient in handling as they are managed transaction by transaction	Convenient in handling
Lending Period	Maximum 270 Days However, maximum 30 days in case of Funds for Finished Goods Procurement	Maximum 180 Days However, maximum 30 days in case of Funds for Finished Goods Procurement
Characteristics	Good for newly applying companies and industry which does not require to secure raw material in advance	Convenient to save and secure raw material in advance
Prearrangement	Not Applicable	Need to calculate the average rate of operation of equipment and the average rate of dependency on raw material
Restriction	Handling of trade finance and collection of export price shall be processed by the same Foreign Exchange Bank as far as they are related to the same letter of credit.	Negotiation and collection of the export bills and local L/C bills shall be processed by the Bank who has handled finance transaction of the company.