Get Medium- And Long-term Finance For Exports

Definition: Medium term refers to the time period of more than 12 months but less than five years. Examples: Examples of external medium-term finance include hire purchase, leasing and sale-and-leaseback. Amount: Medium-term finance deals with fairly larger amounts of money.

Intermediate-term loans: These loans generally run between one to three years and are paid in monthly installments from a company's cash flow. Long-term loans: These loans last anywhere between three to 25 years. They use company assets as collateral and require monthly or quarterly payments from profits or cash flow.

Medium-term sources of funds are usually for a period of more than one year but not exceeding five years in duration. These finances include, loan from commercial banks or financial institutions, lease financing, public deposits, etc.

Examples include Export Packing Credit for production, manufacturing, and packaging of goods for export and Raw Material Financing to purchase raw materials for production. It covers expenses such as raw materials, production costs, manufacturing and packaging.

Medium-term transactions are exports of capital goods and services with a financed amount not exceeding $10 million (excluding the exposure fee) and a repayment term of 7 years or less. Medium-term programs are insurance, guarantees, and loans.

Medium-term financing usually requires funds to be paid back between one and five years; whilst long-term finance is generally anything that is paid back after five or more years. Let us now look at examples of each of these to gain a better understanding of their uses.

Long-term finance can be defined as any financial instrument with maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments.

Unit 2 - Financial Capability for the Medium and Long Term (FCML) (D/504/8110) FCML highlights the importance of planning for medium and long-term financial needs, with particular reference to the importance of the need to budget fro future aspirations and life events.