Buyer’s Credit – Loan Agreement
The problem of financing connected to suppliers' credits to an overseas buyer has led to the development of a system of Buyer's Credit. In this system an Israeli or overseas commercial bank provides a loan to the buyer abroad, which serves to pay the exporter in terms of the contract, immediately upon completion of delivery and acceptance of the goods by the buyer.
In this system the exporter supplies goods and/or services to the buyer abroad, who, upon their receipt issues a letter of acceptance against which the bank provides the financing in accordance to the loan agreement it signs with the buyer.
The money is used by the bank to pay the exporter and the buyer is debited in a loan account which is opened for this purpose by the financing bank.
ASHRA guarantees the repayment of the loan by the buyer to the bank according to the amount of insurance and the percentage of cover. promissory notes drawn on the buyer or other guarantees are required.
The advantage to the exporter of this system of payment is that he receives the entire payment for the export on completion of supply or during the supply period, and does not have any financial commitment to the bank for the period of credit given to the buyer. The responsibility of the buyer for discharging the loan in Buyer's Credit is final and absolute.
On issue of the policy, the exporter signs a recourse undertaking to the benefit of ASHRA, which gives the Corporation the right to claim if the non-payment originates in a commercial dispute between the exporter and the buyer abroad
For your attention: policies and guarantees, as found in this website, are samples only. The versions of policies and guarantees that are binding the Company are these that will be provided by the Company to the insured and duly signed by the Company, in accordance with export transactions that will be confirmed for cover by the Company