In physical commodity trading, timing is everything. You’re buying, shipping, storing, and delivering across borders — long before the final buyer wires the funds. Traditional debt doesn’t fit that timeline. That’s where borrowing base facilities come in. They offer structured, asset-backed financing tailored to the realities of trade.
A borrowing base facility is a revolving credit line secured by current assets — typically inventory, receivables, and in-transit goods. The available borrowing amount (“borrowing base”) fluctuates based on the value of the collateral. When the trader moves more volume, the facility scales with it.
These facilities are built for traders who need to bridge the cash gap between procurement and payment. Unlike vanilla loans, borrowing base credit lines respond to the ebb and flow of your trading activity. They're especially common in agri, metals, oil, and refined product deals.
| Feature | Why It Matters |
|---|---|
| Dynamic funding limit | Facility size adjusts with inventory and receivables |
| Collateral-based | Focuses on trade flows, not long-term credit ratings |
| Rolling maturity | Facilities typically reset every 12 months or less |
| Lender oversight | Collateral monitored through reports and audits |
Each asset is typically discounted by a "haircut" to account for price volatility and liquidity risk. For example, copper stored in an LME-approved warehouse might be valued at 85% of spot, while an open receivable from a Tier 1 buyer might qualify at 90%.
Once the facility is in place, the trader submits a monthly or bi-weekly borrowing base report detailing inventory levels, receivables, and goods in transit. The lender recalculates the borrowing limit accordingly. If the collateral pool drops, the trader must repay the difference or provide substitute collateral.
A regional oil trader holds 40,000 barrels of diesel in bonded storage, valued at $3.5M. They also have $21.5M in confirmed receivables from downstream buyers. The trader secures an $18M borrowing base facility to finance storage, handling, and forward purchases.
The lender monitors the tanks via inspection reports and verifies the receivables monthly. The facility rolls forward as cargo turns over, keeping capital flowing through each transaction cycle.
Because these facilities are asset-dependent, even traders with thin margins or seasonal cash flows can qualify — if the structure is tight and verifiable.
We underwrite trade-backed borrowing base facilities for commodity companies across metals, energy, agriculture, and chemicals. We help clients define collateral pools, prepare borrowing base reports, and negotiate terms with lenders who understand complex trade flows.
Financely helps you access secured borrowing base credit lines tailored to your commodity trade cycle. Whether you're scaling volumes or bridging payment delays, we structure the right facility to keep your cargo moving.
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