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Financing An Import Business To China

Financing An Import Business To ChinaIf you’re looking for a profitable small business venture, starting an import business could be the way to go. Finding the initial money to start one, however, is sometimes difficult.  This is true in all small business, including an import operation.  Special business finance skills are necessary to begin a global business.  Part of the success of the business is to find the right type of financing.

Imports are goods and services that cross into a foreign country for resale.    Import businesses are profitable because of the low-cost goods available for import from foreign countries like China.  The cost of these products is low and they can be resold for a good profit.

Imports can make the difference between success and failure of a small business, especially with today’s economy.  If you’re interested in joining the global market and are getting a traditional bank loan is difficult, you may have to turn to alternative methods for your small import business.  It may be necessary to use more than one method.   Here are a few to consider methods to consider:

  1. Factoring Accounts Receivable

    This is simply selling your credit accounts or accounts receivable to another factor.  The factor can be a commercial finance company, a bank, or an accounts receivable financing company.  These are usually sold at a discount of the face value of the credit accounts.  The factoring company gives you an advance payment, for a small fee of 2-3 percent.  This way, you have the money, and don’t have to wait on for payment. This is known as an asset-based loan.

  2. Financing Using Inventory

    You can use your current inventory to get a loan to finance your import business.  It can be expensive, but a very effective way of financing a new import business.  This uses your current inventory to secure a loan to allow you to buy the imported inventory that your customers desire.  Through this, you can increase your inventory and not impact your cash flow.  Blanket inventory lien, floor planning, or field warehousing are all types of inventory financing.  This makes it an asset-based loan.

  3. Purchase Order Financing

    This form of financing is similar to factoring your accounts receivables.  You just go further and take your invoices or purchase orders and assign or sell them to a commercial finance company.  The finance company has to assume the risk and the task of billing and collecting for these invoices.  The company pays you a profit after it collects the debt from the customer.  The cost is more expensive than a bank loan, but it is a way to get started if a bank loan is not an option. 

Starting an import business may be a bit time consuming, and you may have to use other than normal financing, but the rewards can be great.  If you want to add importing to your current business so you can diversify, don’t let failure to get a bank loan keep you from reaching your goals.  Try one or all of the above methods, and you might be on the road to success in the import business.

 

 
 
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