Barry Grimes-Hardie went to a specialized trading company for capital to front an export deal.
Last winter Barry Grimes-Hardie was thrilled to get a $36,000 order to sell two trailer-size refrigerators to a customer in Mali, West Africa. But in short order, a problem emerged: since Grimes-Hardie wouldn't receive payment until the refrigerators were actually en route to Africa, how would he pay his U.S. supplier and the shipper, each of whom required their money two or three weeks before he'd get his?
Grimes-Hardie, a seafood-company manager just beginning to do export deals through his own business, BridgeLine, in Silver Spring, Md., didn't have the cash to front the money himself. Conversations with bankers proved fruitless: "No bank would consider taking assignment or transfer of my customer's letter of credit, issued by a Hong Kong bank," he says. Luckily, a small specialized trading company agreed to treat the letter of credit as an asset to lend against. By transferring his rights to payment under the letter of credit to Cambridge Trading Services, in Boston, Grimes-Hardie was able to stop worrying about the financial details. "I could focus on my customer," he says.
Conventional lenders tend to shy away from pre-export financing out of fear that the goods won't be delivered. While not every deal will work out, specialists like Cambridge Trading can evaluate export risks more closely.
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Cambridge Trading (phone: 617-482-0072) isn't the only company that has done pre-export deals. Others include OPAL Trade (212-355-3932) and Ecoban Finance (212-486-8080).