Liquidity Squeezes in Greece, China Prompt Private Funding Program
In reaction to the Greek financial crisis and other liquidity events around the globe, Paragon Financial Group of Fort Lauderdale, Fla., has created a program to assist international sellers of goods into the U.S. hampered by the constraints of their local banks. The program will help sellers based in the European Union, South America, and Asia fund and credit-protect their sales into the U.S.
Experts note that a Greek bankruptcy would be the largest in history, and would test the policies put in place by the European Central Bank and other institutions.
China also faces a liquidity crisis this year that could have a serious ripple effects across the global economy according to Zhiwei Zhang, from Deutsche Bank. He said China faces a “fiscal cliff” in 2015 as Beijing deals with excessive spending. “This year, China will likely face the worst fiscal challenge since 1981,” he added. “This is not well recognized in the market.”
“With the liquidity crisis happening around the world and our expertise in funding U.S. importers,” said Chris Curtin, Paragon’s Director of Sales states, “we thought it was a natural progression to help smaller and middle market companies in other countries with their cash flow and credit protection needs.”
With its new international trade funding program, Paragon Financial will typically fund all the landed costs of goods brought into the U.S. Credit protection is offered as long as the company’s U.S. customer is creditworthy and confirm that quality, quantity and timeliness parameters of the goods have been met. A company will need to form a U.S. subsidiary to participate in this program.