London, UK – Geoffrey Wynne, partner and head of Sullivan's Trade & Export Finance Group, worked with an ITFA working group headed by Paul Coles, chair of its Market Practice Committee, to develop a Short Term SWIFT Financial Institution (FI) Trade Loan Template - a new template intended to help streamline trade finance transactions between banks.
While short-term trade loans via SWIFT 799 have long been used between banks, there has been no industry-standard documentation until now. Banks have relied on their own formats, varying by jurisdiction.
The template aims to provide much-needed guidance and provide an off-the-shelf starting point for a borrower bank and lender bank looking to document a short-term trade loan via SWIFT.
The working group aimed to provide an example of “what good looks like” and to keep wording concise while offering guidance on key considerations, such as floating rate loans with periodic interest resets and different governing law options.
The template is not designed to replace other documents, for example, the BAFT Master Trade Loan Agreement (BAFT MTLA) – on which Sullivan also advised – which operates on the basis of a master framework executed bilaterally under which individual loans are executed. In contrast, this template is intended for standalone, one-off loans solely documented via SWIFT messaging.
Geoffrey Wynne, commenting on the new Short Term SWIFT FI Trade Loan Template, said: “Trade finance continues to undergo significant changes driven by technology, regulatory shifts and the need for greater flexibility. By providing a template which helps to standardise one approach we hope to facilitate access to, and growth in, the trade finance industry.”
ITFA members can access the document, which comprises the template and guidance notes, through ITFA’s website, here. The template and guidance notes are for information purposes only and users should seek legal advice before use.
