Suite 4, Level 1, 140 Keilor Rd,
Essendon North Vic 3041

Escrow Facilities

LEASE IN ESCROW FACILITIES

There are two types of escrow facilities available for finance/leasing proposals for equipment and sometimes cars depending on circumstances.

1) Import letter of credit

This is used for the financing of equipment purchased from recognised overseas suppliers. This is where the bank guarantees payment to the suppliers’ bank upon shipping of the equipment. The minimum amount is usually $100,000 and allows for the possibility of:

i) a small deposit up front to the supplier prior to construction of the equipment

ii) payment upon presentation of the Bills of Lading

iii) A payment as per two with a balance payable upon commissioning of the equipment at the clients premises.

Options do exist depending on the financier to either lock in the FX rate if payment is to be made in a foreign currency or forward fix the interest rate if market conditions are uncertain. This is largely due to the time frame sometimes required for construction of the equipment and shipment.

Fees and charges are payable for the issue of the Letter of Credit and interest payable monthly on any draw down of the facility until it is formalised into a principal and interest loan contract. The loan is formalised once the equipment is delivered and installed at the clients’ premises.

The security for the loan is normally the equipment itself and is supported by insurance over the goods while in shipping.

If you have any specialist finance needs for equipment from overseas please contact Andrew Somerton on 03 9377 7000 to discuss what your requirements are.

2) Progressive loan funding/lease in escrow

This is for purchases of equipment or vehicles from a local manufacturer or supplier that requires progress payments along the way.

The loan is structured against a contract between the customer and supplier and with progress payments agreed to be made at stages of production.

The lender will have the equipment inspected to confirm its progress and payment made against an authority from the client.

Interest is payable when a progress payment is made until the loan is formalised into a principal and interest loan. This would be done once the equipment has been completed and inspected and ready for delivery.

The lender will investigate the supplier for their ability to complete the equipment and also base their security against the equipment being purchased.

If you have any questions or requirements for progressive loan funding for equipment, please contact Andrew Somerton on 03 9377 7000 to discuss.

Corporate Finance & Leasing is an authorised credit representative (CR 396988) of BLSSA Pty Ltd (Australian Credit Licence 391237).