Business credit or merchant cash advances are loans made by a bank to businesses and individual borrowers for purposes of conducting trade. Business credit or merchant cash advances are unsecured loans made by a bank to businesses or individual borrowers for purposes of carrying trade. The lender will pay all the interest and charges on behalf of the borrower. It is important for a lender to determine if a business is in a financial position to repay a loan before lending it. If a business is considering taking a business credit or merchant cash advances, a good way to prepare for the repayment of the loan is by preparing the business' budget. The budget will include an estimate of the expenses required to conduct trade each month and a list of income that will be generated from the business each month.
A business should calculate its potential profit in foreign currency before considering a business credit or merchant cash advances. The cost of goods imported into the United States can be very expensive. Calculating the exchange rate of one currency with another will give a better idea of how much one should borrow to get by. The payment received will be based on the difference between the amounts that were borrowed in U.S. dollars and the value of the goods being imported into the U.S. The business owner should factor in the amount of time needed to make payment on a foreign currency loan.
One may receive a credit from a Taiwanese depository institution for purchasing a factory over there. The factory may need to have machinery and other things to run efficiently so a reference bank will be used. The reference bank will provide information about the credit including a Taiwan SRT index so that a more accurate computation can be made of the factory's cost of operation. A factory that is listed in the reference bank's list of businesses that need to have capital invested in Taiwan will need to be carefully considered when determining the amount of credit a business can receive.
A bank in Taiwan will allow a business to obtain a foreign direct investment (FDI) or a foreign trade credit if a business can prove two conditions. The first condition is that the FDI or trade credit will be able to contribute to the growth of the foreign affiliate's sales in Taiwan. The second condition is that the value of the products produced by the FDI or trade credit will be higher than the cost of producing them in the U.S. The bank will then adjust the interest rates in Taiwan to reflect the difference in the foreign affiliate's and the local price. To be eligible for the foreign trade credit, an application must be filed with the Commercial Bank of Taiwan.
A new Taiwan corporation may wish to apply for a business credit facility in Taiwan. To apply, an outline plan for the new corporation needs to be presented to the undersigned. The outline plan should include information on the name of the corporation, its purpose, its registered office and its proposed capital structure. After reviewing the application, the undersigned will evaluate it to determine whether the application is still viable. If deemed still viable, the undersigned will make a recommendation to the undersigned's supervisor regarding the next step.
In most cases, an application for a business credit facility will be approved if the undersigned has met all of the requirements during the submission process. If . . . . . . an application is disapproved for any reason, the undersigned shall not be required to repay the lender. An example of these reasons includes a denial due to insufficient evidence of ability to repay the funds raised through a credit facility. This evidence can consist of the submission of incomplete or inaccurate documentation.
An arrangement between the creditor and undersigned in Taiwan is also required. The arrangement will detail the conditions under which payments are to be made between the creditor and the borrower. Payment terms may be in one month or longer term arrangements may be made. For foreign currency debits, a document stating that the sum of money owed and the amount of foreign currency available to cover those debts must be provided to the customs officer at the port of entry. An individual who fails to satisfy these conditions will be required to pay a penalty fee.
The terms and conditions of a business credit facility may be applied in the normal course of business by duly executing the applicable forms. Foreign currency debits and credits will need to be repaid in a timely manner to avoid penalty fees. A business reference rate will be applied to the balance sheet at the end of each reporting period and will be applied to the date of application to determine the applicable reference rate.