What Is Medium Term Source Finance?


4 Answers

Ebony Nash Profile
Ebony Nash answered
Medium term source financing can refer to any loan with a "medium” length of repayment, but most often "medium term finance” refers to a financial arrangement between Ex-Im Bank and U.S. Exporters and buyers. Ex-Im Bank is the official export/import bank of the United States. In order to promote U.S. Jobs and the export of U.S. Products, Ex-Im Bank provides medium-term financing to buyers who otherwise would not be able to attain financing.

Typically normal banks are not equipped to take the kind of risk that Ex-Im Bank can take. The size of the transaction or even the location of the buyer may prohibit a normal bank from financing a buyer.  Ex-Im Bank provides guarantees which allow these banks to finance buyers of U.S. Exported goods.

Medium term financing is only available for certain goods and services. In order to get financing, the goods or services must have a useful life over one year of time. Disposable goods will not qualify for this arrangement. Most often this type of financing is used for industrial equipment, heavy machinery, or items for nuclear power plants.

Even though the financing is for the buyer of exported products, this is a mutually beneficial arrangement. The U.S. Wants to export more products, the exporter (clearly) wants to export products, but if there are no buyers then this can’t happen. Ex-Im bank provides insurance to a lender that they can safely lend to the buyer even in a risky situation. The buyer is able to purchase U.S. Products�"it’s a win/win situation for all parties.

Medium and long term financing are phrases that mostly apply to international managers, exporters, or buyers of exported products. If you are a private individual with no ties to U.S. Export, it is unlikely that you will be dealing with this type of financing.
vijay mangal Profile
vijay mangal answered
A medium term source of finance means when firms need funds not more than for 2 years. So firms get these finance from Banks or other kind of sources to run the business. Because short term is for 1 year and long term is for more than 1 or 2 years.
Rowan Webb Profile
Rowan Webb answered

Firstly, to define what medium term is - it's a period less than 10 years but longer than the immediate few months (i.e. 1-2 years). This in itself should help to define what kind of finance schemes we are talking about. Things that would come into mind are loans for cars and perhaps other appliances that you can get no interest repayment schemes done up for. Generally, applying for a finance scheme or loan which has a tenure or between 1-10 years time.

Susan Rothman Profile
Susan Rothman answered
There is short term source of finance which is the recent upsurge of payday advance types of loans, which are very short terms sources of finance. There is long term source of finance which is like a mortgage or a lengthy business note, between 10 and 30 years. A medium term is anywhere between the short term and the long term sources of finance. Such could describe a note that is set to be fulfilled in a year or five years.

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