🇨🇳 Financing in China — credit for trading business

Lawyer, Family Office

Concept

Mainland China banks offer some of the most competitive terms for trade finance in the world — rates from3.1% p.a., flexible terms, large limits. Combined assets of Chinese banks exceed$56 trillion, and the largest consistently rank among the world's most reliable financial institutions (Forbes, Global Finance). More than80% of export contractsin China are supported by domestic instruments: letters of credit, Sinosure insurance, trade credits.

Thanks to government support and international market orientation, Chinese financing becomes a reliable solution for importers, distributors and manufacturing companies. Private.law offers three mechanisms for obtaining such financing — depending on the client's business structure and readiness to integrate into Chinese infrastructure.

Mechanism 1: Financing through proprietary infrastructure in China

Suitable for companies ready to establish their own legal entity in mainland China and build local business.

Requirements:

• 6–12 months of company operations with confirmed turnover from$3–5 million per month
• First loan amount — no more than50% of monthly turnover
• If creditworthiness is insufficient — guarantee from private.law group is possible
• Guarantee requires collateral in the form of goods pledge, bank guarantee or other acceptable forms
• Cost of guarantee — 5–6% of deposit amount, equivalent to guarantee used

Collateral:account receivable or goods pledge.

Rate:3.5–4.5% p.a.

Term:3–24 months.

Volume:from$250,000to$10 million.

Mechanism 2: Production and delivery financing

If establishing a proprietary company is not feasible,private.lawgroup provides direct short-term production financing until shipment.

Collateral:goods pledge + Sinosure insurance coverage.

Suitable for:companies sourcing products in China with shipment to foreign markets.

Rate:12–15% p.a.

Term:3–12 months.

Volume:from$500,000to$10 million.

Condition:advance payment from client — from 20% of contract amount.

This is a fast and flexible solution requiring no PRC registration.

Mechanism 3: Long-term financing

For companies interested in longer-term financing,private.lawgroup companies attract financing from Chinese banks and purchase products against it.

Financing can cover both production and post-shipment stages in destination country.

Collateral:goods pledge, transaction insurance, bank guarantee and other types of collateral depending on transaction structure.

Rate:13–16% p.a.

Term:6–24 months.

Volume:from$250,000to$10 million.

Condition:advance payment from client — from 20% of contract amount.

This solution suits large and recurring contracts, as well as deferred payment transactions.

Partner banks

• Bank of Dalian— regional bank, specializes in cross-border trade
• Everbright Bank— second-tier national bank, strong in trade finance
• Pingan Bank— corporate bank, part of Ping An group, technologically advanced, convenient online banking

Each bank operates within its own compliance standards and offers slightly different terms for different product types and jurisdictions. Partner allocation occurs after initial transaction discussion.

Financing process stages

1. Initial discussion— transaction structure, volume, target country, product type. 1–2 days.
2. Document package preparation— borrower's corporate documents, transaction description, sample contracts with suppliers and buyers, financial statements. 1–2 weeks.
3. Partner bank selection— terms coordination with one of partner banks for specific profile. 2–3 weeks.
4. Credit agreement signing— after final approval. 1 week.
5. Tranche disbursement and product purchase/shipment— per schedule agreed with bank.

Total time from first contact to first tranche —4–8 weeksfor mechanisms 2 and 3,2–3 monthsfor mechanism 1.

Documents for review

• Corporate package of borrowing company
• Audited financial statements for last two years
• Transaction description with target volumes and counterparties
• Sample contracts with suppliers and buyers
• Cash flow forecast for financing period
• If available — historical data on similar transactions

Related services

• 🇨🇳 Bank of China— mainstream channel of the "Big Four"
• 🇨🇳 Everbright Bank— partner in trade finance
• 🇨🇳 Dalian Bank— partner in cross-border trading
• 🇨🇳 Company registration in Guangzhou— for mechanism 1
• 🇭🇰 Hong Kong company— corporate wrapper for mechanisms 2 and 3