How to compare finance for China imports
Choose finance by when cash must leave your business and what happens if sales disappoint. Compare repayment triggers, total charges, pledged assets, personal guarantees and currency exposure against a delayed-stock cash forecast. Cambridge China Bridge can help clarify factory payment milestones for that comparison.
Start with the cash gap
Map payments from deposit through production balance, freight, clearance and warehouse delivery to the date customers actually pay. Include testing, storage, returns and finance charges. Use the landed-price guide for the underlying costs; then build a separate cash forecast showing when each payment falls due.
Ask which costs the facility funds, when funds become available and what evidence permits a drawdown. An approval that releases money only after shipment may leave the production deposit unfunded. Keep supplier payment safeguards separate from borrowing terms, using how to pay Chinese suppliers safely.
Compare the repayment trigger
Ask each lender to put the first repayment, final maturity, interest calculation and all charges in writing. Compare arrangement, ongoing, extension and early repayment charges as well as interest. Identify whether repayment follows a calendar date, a shipment document or customer receipts, and whether any large final payment depends on refinancing.
Use the table as a checklist for actual offers. Product names alone do not tell you whether finance covers production, goods in transit or stock waiting for buyers.
| Route | Timing question | Risk to resolve |
|---|---|---|
| Business loan | Do repayments begin before customer cash arrives? | Can ordinary trading cash cover instalments during a delay? |
| Overdraft or revolving facility | When is the facility reviewed, repayable or available to redraw? | What happens if availability is reduced before stock sells? |
| Import or stock finance | Which payment or document starts the repayment clock? | Does delayed or discounted stock reduce funding availability? |
| Invoice finance | Which customer invoices qualify, and when can funds be drawn? | How will deposits and production be funded before invoices qualify? |
| Supplier credit | Is payment due from shipment, arrival or another agreed event? | Does the payment date still arrive before customer receipts? |
Separate security from personal guarantees
Request a written list of assets the lender wants as security, including stock, receivables and other business assets. Ask whether the proposed terms restrict selling stock, taking other finance or changing warehouses. For stock-backed offers, ask how valuation, eligibility and inspections affect available funds, especially after damage or discounting.
A personal guarantee could expose a director's personal assets to claims. Ask a solicitor to explain the proposed guarantee's scope, any cap, treatment of interest and charges, and release conditions before signing. Ask whether it covers this facility alone or other debts too. Do not treat the word 'unsecured' as confirmation that no personal guarantee is requested.
Match currency to the payment schedule
List the currency of supplier payments, borrowing, interest and customer receipts separately. Sterling borrowing does not fix a dollar factory bill. Dollar borrowing deserves a separate repayment forecast if customers pay in pounds. Compare offers using the same assumed payment dates and exchange rates, then test a weaker pound.
If considering a forward currency contract, ask the provider about deposits, additional cash demands and the cost of changing or cancelling it when production slips. Match its amount and settlement date to the expected payment. Keep a delayed-order scenario alongside the planned shipment schedule in shipping lead times.
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Test delayed and unsellable stock before signing
Run separate forecasts for late delivery, slow sales, discounting and stock that cannot be sold. Move customer receipts later, reduce sale proceeds and add storage, rework, returns or disposal costs as appropriate. Treat supplier refunds and insurance proceeds as uncertain until confirmed. Identify the point where available cash no longer covers repayments and essential trading bills.
A loan must be repaid, usually with interest. Do not assume a stock problem postpones repayment; ask what the offer says about extensions, missed payments and reduced collateral value. Keep the evidence needed for a supplier claim, but plan repayment without relying on a quick recovery. If the downside forecast needs an unagreed extension or another loan, reduce the order or reconsider the funding.
Frequently asked questions
What finance is best for importing from China?
Compare actual offers against the full cash cycle. Check which payments are funded, when repayment starts and whether you can repay if stock arrives late or sells slowly.
Can invoice finance pay my factory deposit?
Ask when eligible invoices first allow a drawdown. If that happens after you supply your customer, arrange separate funding for the factory deposit and production balance.
Does unsecured import finance need a personal guarantee?
Ask explicitly. Check business security and personal guarantees separately, and have a solicitor explain any guarantee's scope and release conditions.
What happens to the loan if imported stock will not sell?
Do not assume repayments stop. Check the agreement and contact the lender early. Forecast repayments with lower sale proceeds and without an unconfirmed supplier refund.