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Short term loans are facilities offered for the period of less than one year. These are generally used by the businesses to finance their working capital requirements. These short term loans are intended to finance inventory, account receivable and seasonal business needs. The short term finance comprises of the following:
Running finance or overdraft facility is a short term finance provided to customers to fulfill their working capital needs by allowing withdrawals from their account in excess of the credit balance, maintained with the Bank.
The pledge financing facility is offered to the customer against delivery of goods to the Bank. The goods are held as security and are placed under the custody of the Bank’s approved Mucaddum. Drawing power is determined on the basis of value of the goods placed under pledge along with stipulated margin.
In order to facilitate trade business of SMEs, FBL offers a number of products to its customers
FBL offers to issue letter of credits (LCs) on behalf of SME clients for routing their imports through the Bank. A letter of credit (LC) is the assurance given by FBL to pay the beneficiary on behalf of the importer as per agreement, provided that certain documentary delivery conditions are met. Sight & Usance are two of the main types of LCs offered to the customers.
FIM is a short term facility offered by FBL to the importers for retirement of Sight-LC. The facility is given against the pledge of imported goods. FIM is settled thorough release of pledged goods against gradual or lump sum payments made by borrower.
FATR is a type of import financing offered to FBL customers. In FATR deals, the imported goods are released to the importer on the basis of a trust receipt. This is a short term facility for financing imported goods.
The exporters usually require financing for production and supply of goods as per their contracts with the buyers. In order to support the export business, Bank offers Pre & Post Shipment financing (own sources), SBP Refinance (Pre/post) and bill discounting facilities. The salient features of these facilities are as follows:
Pre-shipment Finance or ‘Packing credit’ is offered to exporters for catering their financing needs for purchasing, processing, manufacturing or packing of goods prior to shipment. In some cases, this facility is also used by local producers for financing supply to reputed buyers
Post-shipment (own) is the financing facility offered to manufacturers and exporters of goods after shipment of goods till the date of realization of export or local proceeds. Through post shipment finance facility, exporters and other local manufacturers obtain finance and run day to day business without waiting for sales proceeds from their overseas or local buyers.
As per directives from State Bank of Pakistan, FBL offers Export finance facility under SBP ERF scheme to support export oriented companies. Both pre-shipment and post shipment finance facilities are available at subsidized rates communicated by SBP.
All major value added commodities exported from Pakistan are eligible for financing excluding exceptions identified by SBP.
This is a transaction-specific facility offered by FBL to provide export finance to the exporters on case‐to‐case basis for pre or post shipments against firm export orders, contracts & LCs. The exporter is required to show export proceeds equivalent to the loan amount as performance.
Pre-shipment ERF Part 2 is a specialized working capital facility available to traditional exporters for purchasing, processing, manufacturing or packing goods prior to shipment. Under this facility, a company can avail finance facility from the SBP equal to half of the export volume routed in the previous year, as long as the company shows export performance twice the utilized limit.
Bank Guarantee is a binding undertaking given by the bank (the guarantor), to pay against the presentation of a written statement of the guarantee holder (the beneficiary), if a contract is not fulfilled by the customer (the applicant).
Long Term finance facility (LTF) is offered for financing fixed assets like immovable properties i.e. land and buildings, machinery, vehicles etc. The loan is offered for pre-determined length of time, usually for more than 12 months. Repayments are required on monthly, quarterly or per mutually agreed repayment frequencies.