In a case where you are dealing with a fairly substantial project (such as a large overseas construction project), you may want to approach a foreign bank to loan you the money to finance the project. Usually the interest rates are somewhat lower than in South Africa and you do not have to worry about exchange rates as the finance is already in the currency that you will be paying for the work (unless the customer fails to pay – see later). The export contract will almost certainly be required as security for the borrowing and the bank will want to approve the customer and/or may require that purchase export credit insurance. They will also undertake a careful credit check on your company and will want to satisfy themselves that you can meet your obligations. For this reason, it is really only the larger companies that can turn to foreign financing and it is not suitable for most smaller exporters. Of course, if your customer fails to pay, you will have to pay the financing from local funds and if the exchange rate turns against you, it could hurt you badly. With exchange control in South Africa, you may also need to obtain official permission to use this form of financing.

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