Vendor Financing

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Vendor Financing

Explore Vendor Financing Solutions

Bill Discounting

HDFC Bank’s specialist trade finance team offers vendors bill discounting services, supported by a nationwide network of branches and correspondent banks. These services are customised to suit vendors’ needs for short-term finance, from sale to payment. As a vendor, you can benefit from:

  • Short-term unsecured finance

  • Credit for up to 90 days for the sale of goods to corporates

  • Self-liquidating financing

  • Funding against corporate acceptance

  • Credit lines based on the financials of the vendor

  • Minimal documentation requirements

Card Reward and Redemption

Structured Purchase Order Financing

Structured Purchase Order Financing allows HDFC Bank to pay for the cost of your goods directly to your supplier, freeing up your cash for other critical business expenses.

  • Funding is provided for 45 to 90 days against confirmed purchase orders from select customers

  • Limits are based on the working capital cycle needed to execute the order. Up to 70% of the value of the purchase order is funded upfront

  • The facility is liquidated from the cash flows generated by the execution of the order, either through bill discounting or invoice financing

  • A commitment from the purchasing corporate is required to route all payments through HDFC Bank

  • Minimal documentation requirements

Card Management & Control

Mortgage-Backed Term Loans

HDFC Bank’s commercial mortgages make owning, refinancing, or renovating commercial real estate easy and affordable. Vendors can also use these loans for working capital purposes.

  • Term loans are provided for expansion and the establishment of additional capacity for select vendors

  • Tenures are available for up to 5 years

  • Limits are based on financial projections, acceptable DSCR (Debt Service Coverage Ratio), and committed long-term contracts for sales with corporates

  • Up to 75% of the project cost can be funded, with the balance to be contributed by the promoter

  • Facilities are secured by the assets being financed. Collateral security may be required in certain cases

  • Minimal documentation requirements

Redemption Limit

Working Capital Facilities

HDFC Bank’s Working Capital Finance helps vendors meet their cash flow requirements.

  • HDFC Bank extends working capital facilities through cash credit, WCDL (Working Capital Demand Loan), LCs (Letters of Credit), guarantees, and export credit to select corporate vendors

  • Credit is provided based on an analysis of financials, funding needs, regulatory guidelines, and security. Cash flows from major customers may need to be escrowed

  • Funding is provided against the hypothecation of stocks and book debts, with a minimum margin of 25%. Collateral security may be required in specific cases

  • Minimal documentation requirements

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Most Important Terms and Conditions

  • *The Most Important Terms and Conditions for each of our banking offerings features all the specific terms and conditions that govern their use. You must go through it thoroughly to fully understand the terms and conditions applicable to any banking product you choose.
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Frequently Asked Questions

Vendor Financing is when a seller (vendor) provides a loan to the buyer to purchase goods or services. Instead of paying the full amount upfront, the buyer pays in installments or defers payments. This helps buyers who need flexibility in their cash flow or who cannot pay immediately.

Vendor Financing involves the seller directly providing credit to the buyer for their products. Dealer Financing usually refers to loans arranged through a third-party financial institution partnered with the seller. In vendor financing, the seller bears the risk, while in dealer financing, the financial institution assumes the risk.

Banks can support Vendor Financing by offering additional services like underwriting, guarantees, or factoring. While vendors provide the main credit, banks help manage risk and liquidity, ensuring the vendor receives payment even if the buyer defaults.

Vendor Financing boosts sales by attracting buyers lacking immediate funds. It strengthens vendor-buyer relationships, offers flexible payment terms, and gives vendors a competitive market edge by facilitating more purchases.

To apply for Vendor Financing, discuss the option with the vendor during purchase negotiations. Provide financial information for credit assessment. If the vendor agrees, submit a formal application detailing your financial status and repayment plan. The vendor will review and approve if criteria are met.

Eligibility for vendor financing depends on the buyer’s creditworthiness and business stability. Vendors typically favour buyers with a strong payment history and a solid financial standing. Individual buyers may need a good credit score and reliable income.