| In some markets and for certain large or complicated transactions, buyer credits might offer the best financing solution.
A buyer credit is a financing arrangement between National Irish Bank and a foreign importer or its bank that is separate from the commercial contract.
National Irish Bank’s role
The advantage for the exporter is that the commercial contract can be settled on a cash basis as the financing is negotiated between National Irish Bank and the importer or, more often, the importer's bank. National Irish Bank may require a guarantee from a private insurance company.
Disbursements are made directly to the exporter upon shipment or the completion of the work, and they can take the form of a qualifying certificate or a documentary credit.
Expenses
Because of the size and complexity of these transactions, the arrangement of the financing often requires external legal assistance.
Normally, the borrower bears the financing costs, including set-up costs. Buyer credits usually entail the following expenses:
- Margin, management and commitment fees
- Legal fees
- Guarantee premium to a private insurance company, if applicable.
- Documentary credit charges, if applicable
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