About the product
Domestic enterprises apply to the Bank to open a cross-border financing guarantee or standby letter of credit in favor of overseas banks, and overseas banks issue loans to domestic enterprises based on the guarantee or standby letter of credit of the Bank.
Product features
1. A convenient channel for enterprises to obtain overseas low-cost funds.
2. Loans can be used for production and operation, repayment of RMB loans, purchase of wealth management products and other purposes.
Application
Enterprises established in China (except government financing platforms and real estate enterprises) that need to absorb low-cost funds from overseas banks.
Rate
0.25‰-1%/quarter of the amount of standby letter of credit, with a minimum of 1000 yuan/quarter. Overseas financing interest rates and expenses are determined by overseas financing banks.
Handling process
1. Domestic companies apply to the Bank to open RMB/foreign exchange loan guarantee or standby letter of credit in the form of comprehensive credit or full deposit.
2. The overseas bank provides credit to borrowing enterprises (the credit procedure can also be operated in advance).
4. The overseas bank issues loans to the borrowing enterprise with loan guarantee or standby letter of credit issued by the Bank.
Case
Company A was established in 2013. Due to the high capital cost of domestic RMB loans, Company A hopes to replace the current domestic RMB loans from overseas financing by borrowing foreign debts to save financial costs. In order to meet the financing needs of Company A, the Bank put forward a business plan of overseas debt under domestic guarantee. With a 100% RMB one-year fixed deposit of 3.3% as the pledge of RMB 61.1 million, the Bank issued a foreign currency loan guarantee of USD 10 million to the overseas bank, and the overseas bank issued a loan of USD 10 million to Company A with the guarantee issued by the Bank, with a loan interest rate of 2.6%, which met the demand of Company A for replacing the high domestic loan interest rate, and helped it obtain the difference income of about RMB 120,000 (6,110 * 3.3%-1,000 * 2.6% * 6.12-6,110 * 5 ‰), with 5‰ being the handling fee of the guarantee.
