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Just like any other industry, foreign trade businesses require a substantial amount of capital to start and operate. Trade finance makes it possible for small businesses who want to buy bulk goods from international suppliers. With cash available, SME’s can take advantage of buying supplies in bulk and negotiating a discount with the suppliers.

If you’re looking to use trade financing for your company, it pays to know a little bit of how you can make the most out of it. Here are five tips to consider when exploring trade finance options for your small business:

1. Consider the Potential of the Business You’re Applying Financing for

Before actually considering applying for different finance options, it’s smart to evaluate whether the activity you’re getting financing for can produce revenue in the future. Otherwise, you’d be stuck paying for something that isn’t actually making a profit for your business. Plus, if you fail to make payments because the products are not bringing in profits, it could ruin your relationship with the financing company.

The best way to avoid this is to do market research about the business project to determine its profitability. It also helps to explore other opportunities that you might not have tapped into and has the potential of generating higher ROI. Trade finance facilities may also be concerned with your business’s viability, so it’s crucial to show facts (research, projections) to convince them.

2. Ensure Protection Against Changes in the Foreign Currency Exchange

An increase and fluctuations in currencies are expected when doing business with other companies in another country. While fluctuations could mean reduced costs, a substantial increase could mean a loss of profit for the company.

When looking at trade finance options, make sure that the financing facility you’re working with supports the currency you’re doing business in. It’s also helpful to negotiate a fixed rate of exchange and draft it into the contract before starting the business relationship. This would mean that you won’t benefit from any fluctuations and potential savings in cases where the exchange rate fluctuates. But, the stability of having a fixed price would also protect you from potential losses if the exchange rate increases substantially in the future.

3. Look Into the Facilities that Offer Trade Financing Options

Applying for a trade finance option is a big decision for entrepreneurs to make. Considering that they would have to borrow a substantial amount of money, it’s natural for them to worry about the cost it entails. However, taking on precautionary steps and exploring the offers of different companies will help you choose the best deal your company can afford. This will ensure that you won’t miss out on opportunities that will benefit your company in the long-term.

When researching facilities, it’s best to consider the type of trade financing they offer – equity, debt, letters of credit, invoice financing, and others. Compare the prices and identify the options with payment terms that would best suit your cash flow cycle. It’s also smart to consider the ease of access to this financing. How long does the approval process usually take? Do you have to meet specific requirements like minimum revenue or credit score for approval? It’s essential to consider these, especially if you’re in a hurry to get the financing.

It also helps to ask your friends in the industry for recommendations. If they have worked with a specific company before, ask them about their experience. Learning from others is the best way to gauge if the facility is the best fit for you.

4. Talk to the Trade Financing Facility Before Doing Business With Them

Once you’ve narrowed down your options on where to apply for financing, the next step is to come down to their office to discuss their offers. This step is sometimes necessary for determining whether the company will be able to meet your company’s needs and negotiate with them so that you can maximize the financing option. By talking to them in person, you’ll be able to discuss the business and financing needs. If they can help you with it, they can tailor an offer that would best fit your company’s financial capabilities.

Since you’re planning on building a long-term relationship with them, it’s also vital to know how the financing company handles their clients. Do they offer alternatives in case they cannot meet your financing needs? Do they give out advice? The level of their customer service will help determine whether they care and value their clients or not.

5. Read the Fine Print of the Contract

Finally, ALWAYS read the fine print of the contract. Just like any type of business financing, trade financing entails costs, fees, and other essential facts that can catch you off-guard if you don’t pay attention to the details. As much as possible, take as much time as you need in reviewing the contracts from the financing companies you’re interested in. Be fully aware of your responsibilities and the fees you have to pay for the financing.

Conclusion

Trade financing is a viable alternative to consider when banks refuse to lend small business loans to SME’s to buy supplies internationally. It’s worth noting, though, that every financing facility may have different requirements, so it pays to inquire with them beforehand. Ensure that your company is qualified if you’re planning to pursue applying for trade financing in their facility. Nevertheless, with proper research coupled with the tips mentioned above, you’ll be able to find the right trade finance option and facility that would address the needs of your small business.

In today’s hyper-competitive global market with rising costs and increasing challenges, saving on taxes can make or break a business and can mean the difference between a secure financial future or just “getting by.”

Increased tax burdens and unfavorable tax laws have left many individuals (perhaps even yourself) seeking what are known as “Tax Havens.” As the name so blatantly suggests, “tax havens” are those countries or places with extremely low “effective” tax rates that foreign investors can take advantage of.

Seeking the citizenship of any of the tax havens can significantly reduce one’s tax burdens. However, in the process, moving to or partially residing in the country is often required; this might be seen as a downside for many investors who don’t wish to leave their home country. However, this is not always the case as there are many citizenship by investment programs that don’t have a minimum residency requirement.

Below, we’ll help you explore several tax havens and understand how will they benefit you and your family in the process of tax planning.

Which Tax Haven Countries can Business Owners Move to?

Business owners are often hit hard by heavily taxed countries, making tax havens an attractive option. If executed correctly, there are a number of legally viable ways, such as offshore accounts and shell companies, that business owners can reduce tax their liabilities.

For example, investing through a company or trust that has been organized in a tax haven is perfectly legal as long as all compliance and regulatory requirements are met. Yet not all countries are a good fit for business owners.

Popular Tax Havens Often Cited Include: Luxembourg, The Cayman Islands, Isle of Man, Jersey (the island NOT the city), Ireland, Mauritius, Bermuda, Switzerland, Monaco, and the Bahamas

Although the aforementioned countries tend to get most of the spotlight when it comes to tax havens, they are by no means the only options. In fact, a number of other countries provide measurable tax benefits while also providing other opportunities such as second citizenship and passports that allow investors to enjoy greater freedom of travel, especially for those from Middle Eastern countries where travel restrictions may be an issue.

What are MENA Tax Havens?

MENA Tax Havens refer to those countries or locations that are open to accommodate the needs of those from Middle East and North African regions. The term MENA covers a vast geography stretching from Morocco to Iran and includes all Maghreb and Mashriq countries. The term is also synonymous or may alternatively be referred to as the “Greater Middle East”.

Popular MENA Tax Havens Include

Saint Kitts & Nevis

Since 2008 there has been a global crackdown on offshore finance and the secrecy that is often associated with tax havens. Political pressure and threats of sanctions from major world powers have forced many countries to open up their books, but not this little dual-island nation.

Investors in Saint Kitts and Nevis can unlock countless business opportunities by being able to open offshore bank accounts and companies while maintaining absolute anonymity and privacy of ownership. Furthermore, Saint Kitts and Nevis’ tax climate imposes 0% tax on global income, inheritance and gifts which makes the island a perfect investment destination for tax planning.

Also, it is worth mentioning that Saint Kitts and Nevis is an island with magnificent nature and climate that draws thousands of tourists each year. Dotted with golden beaches and ringed tropical volcanoes, Saint Kitts and Nevis is an attractive option for citizenship by investment.

Saint Lucia

A premier destination for those seeking offshore banking and financial products. The diversity of its financial offerings and incentives has made St. Lucia an attractive option for many businesses and wealthy individuals. Options include offshore bank accounts, trusts, corporations and more.

Best of all, the island touts the “absolute” confidentiality of client details and the security of all companies formed in the jurisdiction. As an added benefit, the islands have a long-standing, good reputation and have never been blacklisted or placed under international scrutiny from foreign governments to disclose details of its operations.

In addition to anonymity, the island promotes an easy incorporation process, low yearly fees, flexible share structures, no minimum share capital requirement, ZERO or low tax (1% if elected), absence of tax treaties, English Common Law System, and more.

Antigua & Barbuda

The Caribbean is known for its lucrative tax havens, and Antigua is no exception. Antigua, the largest of the Leeward Islands and its neighboring island Barbuda are often favored among businesses looking to legally reduce tax liabilities.

Antigua is a vibrant tourist destination, celebrated for its immaculate beaches and tropical weather. What many individuals may not realize, however, is that Antigua has developed a strong reputation for being a favorable tax haven. Local services include international business incorporation, the formation of trusts, offshore banking and more. Regulated by the Antigua Financial Services (AFSR), the island boasts a very favorable tax regime with a fifty-year local tax exemption on capital gains tax, estate tax, inheritance tax, and local income tax for revenue earned outside of Antigua.

Grenada

Over 2 million years ago the little island of Grenada was actually an underwater volcano. Today, the nation, comprised of around 340+ square kilometers and inhabited by an estimated 110,000 people, is known as the “island of spice”, with exports ranging from nutmeg and mace to ginger, cloves, and cinnamon.

Although tourism is the leading industry for Grenada, the nation is also known for being a favored tax haven among savvy business owner. Grenada is favored for its corporate privacy and Citizenship by Investment Program, providing numerous tax benefits. Furthermore, the country offers no withholding tax, no transfer tax, no tax on capital gains, no inheritance or estate tax, and a 20 years’ tax exemption for offshore companies among other benefits.

Other Prospective MENA Tax Havens

Other prospective tax havens worth mentioning include Malta (although it isn’t straightforward) , Dominica, Cyprus, Portugal, and Greece.

Personal Tax Benefit of Making the Move

The appeal of making the move to a tax haven isn’t only due to corporate benefits. Individuals invest in a tax haven in order to reduce personal tax liability on interest, personal income, inheritance, capital gains and more. Those wealthy enough stand to save millions of dollars by leveraging these legal loopholes and incentives.

Corporate Tax Considerations

Although the primary focus of most corporations is to save on taxes by reducing tax liability, there are a number of other considerations that must be taken into account. For example, what is the process like? Does your corporation qualify? What types of fees are involved? Is residency required? What will the ongoing costs of maintaining your corporation’s status in the haven look like and what will this cost you? Are there any regulatory, political or socioeconomic dangers or risks in the region?

These are just a few points to consider before taking the plunge.

How Will Making the Move Affect US Citizenship?

Generally speaking, US citizens and permanent residents are taxed by the IRS regardless of where they are physically residing. While the Foreign Earned Income Exclusion does offer a bit of relief, anyone earning over $105,900 in active income per year won’t be able to avoid taxation.

Moving to another country will not impact US Citizenship. However, those seeking to pay zero or close to zero taxes may find it useful to obtain second citizenship in any tax haven of their choice while also renouncing their US citizenship.

Bear in mind that the USA is the only country that enforces taxation based solely on the citizenship of the individual in question.

Closing Thoughts on Moving to a Tax Haven

There are many misconceptions regarding what it means to move to a tax haven, however, with the help of professional services that deal with these transitions you can largely avoid all of the potential pitfalls while reaping the many rewards.

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Rasha Seikaly, an IMC member, is Bluemina’s Head of Marketing. Bluemina provides families, individuals, and investors with the best and most expedited Citizenship and Residency by investment programs

5 Tips for Small Businesses Exploring Trade Finance Options