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Many Canadian companies are looking to remain competitive through international sales or investment abroad. This means developing new networks or establishing joint ventures or local operating facilities, all of which can tie up a company’s working capital. For supply contracts and in order to garner better terms of payment, an exporter may be required to provide the vendor with collateral in the form of a letter of guarantee. In the case of offshore working capital facilities, a Canadian company may need to provide the foreign bank with security – through a letter of guarantee – in order to establish an operating line of credit for its foreign operation.
EDC’s Financial Security Guarantee (FSG) replaces the collateral, both for the supply contract and for the offshore working capital facility, and by doing so, will increase your capacity to provide additional support to your customers.
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