Corporate (commercial) credit is a credit relationship, the subjects of which are firms. In this case, payment is made before or after receipt of documents of title. In the first case, the creditor is the importer, who issues an advance (prepayment 100%) to the exporter, but does not yet have title deed and other documents. In the second case, the creditor is an exporter who provides the importer with a loan in the form of a deferred payment for the goods delivered.

A firm (commercial) loan is usually issued by a promissory note or provided on an open account.

Depending on the lender, the bill of exchange of the importer and the promissory note of the exporter are distinguished.

The bill of credit of the exporter provides for the issuance of a draft on the importer, who, having received commercial documents, accepts it. The bill of credit of the importer provides for the issuance of a solo bill promulgated by the exporter.

With a loan on an open account, firms open accounts in their books to each other, which take into account mutual debt (offsetting takes place). After the shipment of the goods, the exporter makes a recording in his books of the amount due to the debit of the open account, and the importer makes a similar entry in the credit of the account opened to the exporter. As a rule, an open account credit provides for commercial crediting of the importer and in this case is not profitable for the exporter, since it is associated with an increased risk. Therefore, a credit on an open account is applied between long-term cooperating firms, branches of large companies engaged in barter transactions, acting simultaneously in the form of sellers and buyers.

Advantages of a corporate (commercial) loan

• Independence from state regulation;
• Relative non-interference of state bodies in commercial transactions;
• great opportunities to coordinate the cost of credit directly between counterparties;
• the non-inclusion of the term of use in the full term, which actually prolongs it in comparison with the bank loan.

Disadvantages of a corporate (commercial) loan

• limited time and amount of lending by means and state of finance of the supplier;
• the need for refinancing in the bank;
• the buyer’s relationship with a particular supplier;
• an increase in the price of the goods compared to the price of a similar product for cash.

Bank crediting of exports and imports is in the form of loans secured by goods, commodity documents, bills or without formal security.

Bank loans are provided by banks and other financial institutions. There are export and financial bank loans. Export credit is the crediting of the bank of the country of the importer (or directly importer) by the bank of the country of the exporter for the sale of the credit line. These loans are of a targeted nature, the borrower is obliged to use the loan solely for the purchase of goods in the creditor’s country. Financial credit allows the borrower to use the loan for various purposes, which enhances the advantage of this type of loan. So, a financial loan can be used to pay off foreign debt, support the exchange rate, replenish accounts in foreign currency and other purposes.

Large banks practice granting an acceptance loan, the essence of which is the acceptance of bank drafts by the exporter to the importer upon prior agreement of the latter.

Expansion of the foreign trade turnover, the problem of mobilizing large sums for long terms led to the development of medium – and long – term international export credit. One of the forms of lending by banks is a loan to a buyer. The peculiarity of such a credit is that the exporter’s bank does not lend to its client, but to a foreign buyer, with the debt attributed to the bank servicing the importer or directly the importer itself. At the same time, the possibility of overstatement of the credit price is excluded, since the exporter does not participate in lending the transaction. Thus, banks act as co-organizers of business activities of clients, participating in negotiations on commercial and industrial cooperation, being centers of economic information and freeing exporters, thus, from various financial and commercial risks.

Advantages of bank loans:

give the recipient the opportunity to use funds for the purchase of goods more freely; free from the need to apply for credit to supplier firms; give the opportunity to make with the supplier firms the settlements for goods in cash at the expense of a bank loan; Thanks to the attraction of public funds and the application of guarantees, commercial banks can provide export credits for 10-15 years at below-market rates.

Disadvantages of bank loans:

banks tend to restrict the use of credit outside their own country; it is often necessary to use the loan for strictly defined purposes, which gives bank loans the properties of branded ones.