> For the complete documentation index, see [llms.txt](https://polytrade.gitbook.io/polytrade-gitbook/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://polytrade.gitbook.io/polytrade-gitbook/guides/what-is-trade-finance.md).

# What is Trade Finance?

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Polytrade only caters to the Factoring / Invoice Financing Service for SMEs.
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Every business needs to manage its working capital and maintain a healthy cash flow to succeed. For this, it needs a regular flow of money. Sometimes these finances are provided by banks or financial institutions.

However, there are several limitations to using traditional banks or institutions, such as:

a) Banks are highly regulated, and thus a customer needs to go through extensive scrutiny and paperwork.

b) Banks charge a high amount of interest from businesses.

c) Banks hardly provide these services to SMEs (Small and Medium Enterprises).

Trade Finance is a bundle of services to make trade transactions more feasible. Therefore, Trade Finance companies connect investors with these SMEs and create a win-win situation for all the stakeholders (i.e., SMEs and Investors).

Trade Finance includes a wide array of services such as:

* Factoring / Invoice Financing.
* Letter of Credit.
* Bridging.
* Stock Finance, etc.