Product

Import guarantee

A letter of credit guarantees international money transfers between two banks on behalf of two companies. The purpose is to ensure that a seller in one country receives payment for their goods and services, and a buyer in another country receives the goods and services as agreed.

Eksfin can guarantee the money transfers of a company with two types of letters of credit for the company’s bank: export letter of credit (link) and import guarantee (for export).

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About the product

An import guarantee assures payment from Norwegian companies for imported goods

An import guarantee assures money transfers in connection with the import of goods. Should the imported good(s) then be exported, Eksfin will be able to mitigate the risk of the bank by issuing an import guarantee. The Norwegian company’s bank issues the letter of credit. Eksfin can also mitigate the bank’s risk by providing an import guarantee for the bank, which strengthens the bank’s possibility to issue the letter of credit on behalf of the company.

Eksfin can also mitigate risk for banks within the frameworks of import letters of credit. A letter of credit provides several advantages when trading across borders:

Secure payment method
Possibility to control the delivery time
Avoids advance payment
The seller or sub-supplier can initiate production/supply
The bank guarantees the ability to pay
Uniform rules through the International Commercial Chamber (ICC)

Eksfin can guarantee confirmed letters of credit issued in connection with deliveries in export value chains, i.e., from a foreign sub-supplier to a Norwegian importer, who thereafter delivers to Norwegian exporters.

Conditions and structure

Eksfin’s guarantee covers a portion of the loss the bank would suffer if the letter of credit amount is not paid by the customer’s bank by the due date
The guarantee normally covers up to 50% of the bank’s risk
In letter of credit transactions, the banks are concerned with documents not goods. If the related goods do not meet the quality requirements, etc., the parties must address the matter in the commercial contract

How much does the guarantee cost?

Eksfin charges the same risk premium as the bank.

How to apply?

Companies are welcome to contact us directly to discuss their options. The company’s bank, however, must apply to Eksfin for an import guarantee.

The bank will apply to Eksfin before the letter of credit is confirmed. It normally takes Eksfin one to two working days to process applications of this kind.

Apply here