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  • 10.5.4-RISK AND THE RELATION TO TRADE CREDIT-THE BORROWER'S BALANCE SHEET

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  • The borrower's balance sheet

     
     

    The borrower's balance sheet is of course important - if it is not sound then not much else is likely to be sound either. But in any case international trade finance for coffee producers and exporters is nearly always, if not exclusively, based on realizable collateral security. Only very large 'blue chip' companies can obtain substantial credit lines on the strength of their balance sheets. At the other end of the borrowing scale are those who can obtain only fully collateralized credit (sometimes only against offsetting sales) because there is less balance sheet security.

    Less substantial and smaller firms will usually be subject to detailed day-to-day scrutiny by both banks and collateral managers - more substantial or highly secured borrowers will fall somewhere in-between.