Non self liquidating debt
They can also be called self-liquidating investments though this may cause some confusion as other traditional investment structures are self-liquidating, for example, debt.While many of the existing Alternative Exit structures have been used for non-impact investments, the movement towards social enterprise and impact investing has raised the profile of Alternative Exits because of several factors that are common in impact investing.ICC Banking Commission’s most recent Trade Register Report reiterates that banks are shifting their attention back to their core business, limiting supply and reducing risk appetite towards the provision of trade finance.Yet as an asset class, trade finance should be treated as favourable, with low expected losses in defaults.Many traditional financing methods are not Appropriate Capital.For example, debt forces a company to pay at a specific schedule but would not be appropriate for a company that can not predict if their business performance will match the debt schedule.
Trade finance helps traders or producers, move tangible goods across supply chains.
Alternative Exits are financial structures that allow investors to realize their investments return using methods other than traditional debt and equity investment.
An “exit” is the method the investor uses to get the return on investment including their original capital and their profit.
Particularly in less economically developed countries, or where companies do not have a high enough credit rating to access finance, buyer has the ability to achieve more favourable payment terms from sellers or suppliers.
For those with capital tried up, small balance sheets, or long payment terms, trade finance providers, When applied to trade financing, a self-liquidating structure is a credit that is repaid using the revenue generated out of that initial loan.For example, a common stock listed on an exchange, the exit can be as simple as selling to another investor.