Import loan: Things to consider to get the right business loan

Import loan: Things to consider to make the right choice

If an import loan is the correct choice to finance your next import then you have some important things to consider.

If you import goods, components, commodities, services, equipment or machinery into the UK and think you might require finance support now, or in the future, continue reading.

We’ll cover everything you need to consider when choosing an import loan to finance your imports so that you don’t make the wrong choice and waste valuable profit below…….

 Import loan – what you should consider:

Short term or long term? Secured or unsecured? Traditional repayment or interest only. Those choices alone are difficult to make without considering the pros & cons carefully.

However, there are many other things you should seriously consider as an importer. The right choice will not only protect profit but could also mean no debt.

  • Importing for use in your Business or as a wholesaler, distributor or re-seller?
  • Frequency of import. Once per year of more?
  • When does your overseas supplier need payment. One payment at shipment or in stages over a couple of months?
  • Can the import loan be lent in the currency you’ll pay your supplier? Or will you have to consider currency exchange, hedging and letter or credit costs?
  • Type of import for which the loan will be required? For instance asset finance is better than an import loan to purchase equipment or machinery.
  • Do you think you will repay the loan early? If so what early repayment penalties and charges apply?
  • Alternatively rather than early repayment, will you need another import loan or “top up” within a few months of the original loan? If so a facility might be a better choice.
  • How quickly do you need the finance? Most long term and secured loan lenders require extensive Company information and take typically 3 weeks to reach a decision.
  • Will the import loan be used just to pay for imported goods or will it be used to pay for freight, shipping, import duty and VAT?
  • What is your profit margin on the imported item(s) or product(s) made using the imported good(s)? Short term, unsecured loans tend to be very expensive, (2-3% / mth), so on a typical 3 month trade cycle is a 9% reduction in your gross profit acceptable?
  • What experience of importing do you have? if repayment of the import loan requires you to sell the imported item(s), or products made using that import, can you show the lender you’ve successfully done this before?

Thinking about the above things, plus many others relating to your Business can make the difference between a profitable, smooth import trade and a nightmare that takes months to get yourself out of.

Import loan – Handy solutions summary:

Over 75% of importers think they need a business loan to finance their import business. It is the most common form of lending, and most easily understood, (borrow X, at interest Y and repay Z by “date”).

However it is not always the best type of import finance for regular import trading of specific types of import.

Below are some alternatives worth considering.

If you’re short of time the following table provides a handy review:

 

Import Type Revolving credit facility Business loan Asset Finance Invoice finance / Factoring
Finished goods Yes Yes No Yes
Unfinished goods Possibly Yes No Yes
Components Possibly Yes No Yes
Commodities No Yes No Yes
Perishables No Yes No Yes
Equipment Yes Yes Yes Yes
Machinery Yes Yes Yes Yes

Click any of the table headings to access more detailed information on each import finance solution.

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Import loan – more help & information:

Our Firm specialises in supporting importers and financing imports of any type & value.

In fact we are the only independent, whole of market commercial finance brokerage in the UK dedicated to offering import trade finance products, support and advice.

If you don’t feel confident, or simply don’t have the time to analyse your Business, decide which type of import finance is right for your type of imports & trade or prepare the Applications, we can help you:

  1. Decide if & which import trade finance products you’re eligible for; (free, no obligation service);
  2. Compile, submit and deal with all Applications to suitable commercial finance lenders; (fixed fee) and
  3. Secure and implement the approved import trade finance solution which we guarantee will be….
    • Of the right type;
    • At the right price;
    • On the right terms

Discover which import trade finance products are right for your business?

Book a FREE, NO OBLIGATION call with one of our Trade specialists. They’ll analyse your trade and advise which, of the many solutions available, is right for you.

Contact:

We hope you have found this review of what to consider before choosing an import loan useful.

If you think import finance would be a solution for your Business now, or in the future, please book an informal, no obligation, discussion regarding your Business, ambitions, the proposed trade and your unique circumstances.

Alternatively if you have any questions please use the contact form below.

Either way we’d love to hear from you.

Discover which import trade finance products are right for your business?

Book a FREE, NO OBLIGATION call with one of our Trade specialists. They’ll analyse your trade and advise which, of the many solutions available, is right for you.

Importing is your Business, financing it is ours.

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Based in the Midlands, UK. Serving Businesses nationally & internationally.