Financing solutions for the purchases of companies that import and/or want to import goods and/or services from abroad have become important for sustainability, especially during the pandemic period.

Companies that either buy goods from abroad and sell them in Turkey or purchase basic equipment, raw materials and/or services from abroad for their projects normally select suppliers, receive their offers and complete the import process by making the payment.

While the cash problem has manifested itself in the business world adversely affected by Covid-19, the solution for companies that want to continue their business and projects may be to consider the deferred repayment option when importing.

Under the General Terms and Conditions, financing is provided in Euros for transactions up to EUR 5 million. Depending on the creditworthiness of the Turkish importer and taking into account the country risk, it is possible to establish this credit with an average interest rate of 3.5-4.5% and maturities of up to 60 months in 3-month or 6-month periods. In addition to the interest rate, there is also the cost of the management fee of the Bank providing the loan abroad, the cost of the Consultant company organizing this transaction and the cost of including the government incentive of the exporting country. Nevertheless, as hedging is already included in domestic loan interest and costs, a very affordable source of credit and financing is created.

In this type of lending, a prepayment of 15-20% is paid in advance to the exporter and the loan is paid directly to the exporter without entering the account of the importing company.

The conditions to be met by the importer company are as follows:

• Profitability for the last 2 years
• Maximum; 3.0 x net debt / EBITDA
• Shareholders' equity more than 20%
• Contract value not more than 50% of equity
• The company must be at least 5 years old (if SPV, guarantor is required)

In sectors other than the military and Défense industry sectors, it is accepted that at least 51% of the goods and/or services purchased must be from the exporting country, especially for purchases for projects, with a maximum of 23%. While the cost of services within the project can also be considered within the import amount, it is envisaged that the cost of this part can be at most 30% of the amount of financing to be received.

On the one hand, this financing solution is fundamentally similar to the Turk-Eximbank buyer financing model used by Turkish exporters to create markets, except for the structure that provides this incentive, in this solution, another foreign bank carries out the lending process first-hand and makes the applications on behalf of the importing company.

In addition to the financials required to qualify for this solution, the goods/project introduction file, Importer Company Profile, Contract monetary value, advance amount, goods-service delivery date and operation readiness schedule are also prepared and submitted in English.

With multiple methods that can be used especially for imports from Germany, Austria and Switzerland, these instruments provide a mechanism for Turkish companies to manage their cash flow.