Trade Finance Guide

SVB’s Asset PurchaseProgram (APP)IntroductionMethods of Paymentin International TradeCash-in-AdvanceDocumentary CollectionsOpen AccountExport Working CapitalFinancingExport Credit InsuranceSVB’s Asset PurchaseProgram (APP)ForfaitingLetters of CreditThe Export-ImportBank Working CapitalProgramsGovernment AssistedForeign Buyer FinancingSVB’s Asset Purchase Program (APP) allows SVB to finance acompany’s sales through the purchase of invoices or accountsreceivable. SVB’s Asset Purchase Plan (APP) is offered under anagreement between SVB and the exporter, in which SVB purchasesthe exporter’s approved short-term foreign accounts receivable forcash at a discount from the face value on a non-recourse basis andassumes the risk of the foreign buyer’s ability to pay. By virtuallyeliminating the risk of non-payment by foreign buyers, SVB’s APPallows the exporter to offer open account terms; improve its liquidityposition; and boost competitiveness in the global marketplace.SVB’s APP can be a viable off balance sheet alternative. Purchasesmade under SVB’s APP are made on a “true sale” basis and are alsoused for balance sheet window dressing.Characteristics of SVB’s Asset PurchaseProgramApplicabilityIdeal for an established exporter who wants: (1) the flexibility of sellingon open account terms, (2) to avoid incurring any credit losses, or (3)to improve their cash position without further borrowing.Purchases are made on a “true sale” basis and are also used forbalance sheet window dressing.RiskRisk inherent in an export sale is virtually eliminated.Pros° Eliminate the risk of nonpayment by foreign buyers° Maximize cash flows° DSO improved° Manages buyer risk° Does not require an all-asset lienCons° More costly than export credit insurance° Limited availability in developing countries° Limited availability; reserved for well-established, largercompaniesTrade Finance Guide 27