Why most companies only resort to the conventional facilities, like overdraft and term loan, for their business expansion? There are other forms of banking facility that these companies can avail to and supplement their normal and existing facilities. Though some companies have been exposed to trade financing such as letters of credit and trust receipts, most businessmen, including accountants, are unfamiliar with bills discounting, banker acceptances and export credit refinancing.

Thus, they miss a golden opportunity to seek the cheapest form of financing for their businesses. They too need not have to rely on their collaterals, if they don’t have, to support their application for trade lines.

The government of Malaysia, in order to expand the export sector, had for a long times been encouraging the banks to offer these trade lines at a very low rate of interest. Banks are also convinced to be easy with the limits and terms of these trade lines. Thus the gearing of company and the margin of advance against value of the collateral are unbelievable, depending on each bank’s policy.