The worldwide growth in international trade and investment during the previous decades brought about renewed interest in offshore lending, transforming it from simply a business that was primarily engaged in the financing of trade, into a much broader enterprise which is heavily involved in transactional lending. Offshore international capital loans have been extended by banks for many years.
An international loan, in its simplest form is financing given by a foreign lender to a U.S. borrower. Likewise, when a foreign borrower obtains financing from the US, the loan is also said to be international in nature. A better definition of international loan therefore would be any capital that was made offshore or across the border.
Often, international loans exhibit the same characteristics as with domestic lending, such as import and export financing. Loans to foreign and local companies, partnerships, and individuals including, foreign entities of US corporations that borrow on their own without any form of support from the parent are also available to bolster international capital management.
As with domestic banking, there are international business loans, real estate and commercial. Offshore banking bank transactions can also include international mortgage or home loans and repeat financing. Some capital sources can even act as consultants in international loan packaging or provide cash payday loan services. International loan providers and lenders provide personal and payday loans, construction and project financing among others.
But while foreign credit markets or international capital markets have more moving parts than do domestic markets, they differ only in detail and not in the basic offshore bank formation. For the lender, lending principles are the same in Rhode Island and in any offshore bank Bahamas may have. The same principles, understanding the transaction, adequate knowledge and understanding of the borrower, risk definition and a clear indication that the loan will be repaid, still apply.
The borrower, meanwhile, defines his needs for funds, develops overall financial strategy which will structure the loan in a way that makes the most sense, and negotiates with the offshore bank formation to meet his requirements. These reciprocate the lender’s ability to make funds available, and the patterns used in making them available and interact with his standards.