Advantages and disadvantages of financing lease with internal insurance and external debt

Internal insurance and external loan means that the internal head office of the enterprise guarantees the bank, and the bank solves the loan problem for the external enterprise. The form of guarantee is: within the limit, domestic banks issue letters of guarantee or standby letters of credit to provide financing guarantee for domestic enterprises and overseas companies without separate approval, which greatly shortens the business process compared with the previous financing guarantee.

The first is "internal insurance", that is, domestic enterprises apply to domestic branches for issuing letters of guarantee, and domestic branches issue financing letters of guarantee to offshore centers;

The second is "foreign loan", that is, the offshore center issues loans to overseas enterprises with the letter of guarantee received.

In this context, it can be solved by the bank's "internal insurance and foreign loans" business. Domestic enterprises apply to domestic branches of banks to open financing letters of guarantee, and then domestic branches issue letters of guarantee to offshore centers, which provide credit to overseas companies to meet customers' needs. Domestic insurance and foreign loans have the characteristics of regulatory risk and arbitrage risk.