Buyer credit
A loan granted by a bank in the exporting country directly to the foreign buyer to finance the acquisition of goods and services.
Buyer credit is a loan granted by a bank in the exporter's country directly to the foreign buyer (or their bank) to finance the acquisition of capital goods or services. The exporter is paid in cash and the credit risk is borne by the lending bank.
The structure involves three separate contracts:
- Commercial contract between exporter and buyer
- Credit agreement between the lending bank and the borrower (buyer or their bank)
- Credit insurance policy covering the bank against non-repayment risk
Buyer credit is suited to large transactions (over EUR 5-10 million) over long periods (5 to 12 years). It is often used for infrastructure projects, energy, transport and defence.
Its main advantage is deconsolidation: the exporter is paid in cash and bears no credit risk. The cost is generally lower than supplier credit for large amounts.