Export financing is a way for small and medium enterprises (SMEs) to get money needed to produce, ship, and sell products abroad. Many new exporters face problems because they do not have enough cash to make goods, pack them, or pay for shipping and customs. Bangladesh banks, the government, and SME Foundation provide loans and support to help SMEs trade globally. This guide explains pre-shipment and post-shipment financing, government programs, tips for beginners, and how to use funds effectively.
Step 1: Understand Export Financing
• Export financing is money to help SMEs pay for export-related costs
• Includes producing goods, packaging, transport, and customs
• Helps manage cash flow and avoid delays
• Two main types: Pre-shipment finance and Post-shipment finance
Why it matters for SMEs:
Many small exporters cannot start an order because they lack money. Financing helps them produce on time, maintain quality, and deliver to international buyers.
Step 2: Pre-Shipment Finance
Pre-shipment finance is money for preparing goods before shipment.
It can be used for:
• Buying raw materials (fabric, leather, food products)
• Manufacturing or producing the goods
• Packaging, labeling, and quality inspection
• Transporting goods to the port or warehouse
Who provides pre-shipment finance:
• Commercial banks (export finance schemes)
• SME Foundation supported loans
• Microfinance institutions (for very small exporters)
Tips for SMEs:
• Plan exactly how much money you need
• Borrow only for export purposes
• Keep receipts and proper records
Step 3: Post-Shipment Finance
Post-shipment finance is money for after goods are shipped.
It can be used for:
• Bridging the time until the buyer pays
• Converting foreign payment to Bangladeshi Taka
• Reinvesting in the next order or production
Who provides post-shipment finance:
• Export-oriented commercial banks
• Foreign trade financing services
• Government export support programs
Tips for SMEs:
• Track each shipment and payment carefully
• Use funds to prepare for next order
• Keep all shipping and payment documents
Step 4: Government & SME Support
The Bangladesh government encourages SMEs to export and offers financial help:
• SME Foundation: Low-interest loans for export businesses
• Bangladesh Bank: Pre-shipment and post-shipment financing facilities
• Export Promotion Bureau (EPB): Advises exporters and helps access funds
• Special incentives for sectors like garments, leather, handicrafts, food, and agro-products
Example:
If a small leather bag manufacturer in Dhaka gets a foreign order, pre-shipment finance helps buy leather and pay workers. After shipment, post-shipment finance helps cover bank charges until the foreign buyer pays.
Step 5: Tips for Accessing Export Finance
• Prepare a simple business plan with expected export revenue
• Have Trade License, TIN, and ERC ready
• Explain clearly what the money is for (raw materials, shipping, packaging)
• Maintain records of previous exports if available
• Start with small loans to learn the process
Current Situation for SMEs in Bangladesh
• SMEs are exporting more than ever, especially in garments, leather, handicrafts, food, and agro-products
• Banks provide online application for easier export finance
• Government programs encourage first-time exporters to access financing
• Proper finance management helps SMEs produce on time, maintain quality, and expand to new markets
Common Challenges Faced by SMEs
• Lack of knowledge about available financing options
• Difficult paperwork for first-time applicants
• Delayed approval or disbursement of funds
• Poor cash flow management leading to production delays
• New exporters often underestimate costs
Helpful Resources for SMEs
• Bangladesh Bank SME Support: https://bb.org.bd/en/index.php
• SME Foundation: https://smef.gov.bd/
• Export Promotion Bureau (EPB): https://epb.gov.bd/
• National Board of Revenue (Customs & VAT info): https://www.nbr.gov.bd/
Final Advice for New Exporters
• Plan finances before accepting export orders
• Choose the financing option that suits your business size
• Maintain proper records of all loans and shipments
• Use SME Foundation and bank advisory services for guidance
• Start small and grow gradually to avoid cash flow problems
Export financing ensures SMEs in Bangladesh can manage production costs, meet deadlines, deliver quality goods, and expand into international markets successfully.