Emerging market (EM) manufacturers were facing difficulties even before the coronavirus pandemic decimated international demand for many of their products.
The Asian Development Bank estimated that $1.5 trillion of requested trade finance was rejected last year – a figure that could rise to $2.5 trillion by 2025, according to the World Economic Forum (WEF).
In mid-May, Stenn closed a new $200 million financing facility to provide liquidity and cash-flow management to global companies affected by the coronavirus pandemic. Then in the first week of June, the company announced that a new round of funding had boosted its core trade financing programme to half a billion dollars.
Stenn hopes these funds will help it capitalize on the increased acceptance of non-bank trade finance, as indicated from a survey it conducted with more than 700 medium-large sized businesses in the UK, US and China at the end of last year.
More than 80% of respondents said they were considering switching to alternative finance providers from traditional banks for trade finance in 2020, with Chinese businesses particularly keen to explore their non-bank options.
Kerstin Braun, president at Stenn, says most manufacturers have had to eat into their liquidity reserves during the coronavirus crisis and that many are now operating on as little as four weeks’ cash flow.