When PPP and Bank Loans Fall Short, Trade Finance Provides Flexible, Fast Funding to Ease Economic Effects of Coronavirus

On Thursday, May 28th, Tradewind Finance, EACC-NY, Pepper Hamilton (now Troutman Pepper), and CLA Connect jointly conducted a webinar titled “How to Navigate the After Effects of the U.S. Stimulus Packages". The webinar included discussions on the Paycheck Protection Program and how it differs with offerings by the EU, as well as other available programs for funding to combat the economic effects and supply chain disruptions that have resulted from Covid-19.

During the webinar, Tradewind’s William Avedon narrowed in on trade finance, examining its alternative short- and medium-term lending options for businesses that do not benefit from the government-led rescue funding programs or are being denied credit lines by banks that have tightened their lending standards.

Trade finance is used to increase liquidity for a company through different alternative financing methods including cash advances on receivables upon the purchase of these receivables by a third-party financial intermediary. In addition to accelerating cash flow, trade finance minimizes the risk involved in cross-border trade through such features as credit protection, A/R management, collections and bookkeeping.

Trade finance has gained more traction since the outbreak of Covid-19, coming into play as the flexible lending solution when bank loans have come up short. This type of financing also provides for an easy application process and quick and scalable funding for the client. With many industries contending with strong blows from the coronavirus, businesses, with the support of trade finance, can negotiate payment terms that optimize the working capital of both buyers, who can secure longer windows to pay their invoices, as well as suppliers, who receive early funding.

Whereas banks have been tightening their credit, Tradewind Finance, an international trade finance firm that provides factoring and supply chain financing, has, for example, unrolled initiatives to make their services more adaptable to the current economic climate, like financing payment terms up to 180 days and accommodating the unique trading circumstances of their clients and new businesses.

Since trade finance is not a loan, it does not have to be repaid, which is a relief for businesses already flailing in the upset of the pandemic. As many companies have their plates full on how to keep their business financially healthy, as well as their products and services innovative and appealing enough to generate sales, trade finance can off-load any added financial pressure so a company can focus on its growth and other strategic goals.