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Credit Line – Loan Agreement
As a substitute but similar to Buyer's Credit, the Corporation also insures export transactions by means of Inter-Bank Credit Lines.
This system removes the financing burden inherent in suppliers credit, and instead of the financing bank providing a loan to the buyer abroad and being exposed to the buyer's risk, the bank provides the loan to the buyer's bank overseas which then becomes the debtor and carrier of the risk, and the overseas bank provides the loan to the final buyer.
In this system the exporter sends the goods and/or services to the buyer abroad, who on their receipt signs an acceptance document. Against the acceptance, the buyer's bank abroad will execute the withdrawal according to the loan agreement it has with the local Israeli bank. Against the loan to the buyer's bank abroad, the local bank will reimburse the exporter in cash, and the foreign bank becomes the debtor.
ASHRA guarantees the payment of the loan by the foreign bank, whose responsibility from the time the loan has been provided is final and absolute.
With the issue of the policy, the exporter will be required to sign a recourse undertaking to the benefit of the Corporation similar to the case of Buyer's Credit.