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Financely · Commodity Finance
If you are holding commodity inventory in storage and waiting to sell, you are leaving working capital locked up in a warehouse. Commodity inventory finance lets you borrow against the value of that stock now, fund new purchases, cover operational costs, or capitalise on a price window, without having to sell early at a discount. Financely arranges inventory finance facilities for commodity traders, producers, distributors, and processors holding oil products, base metals, agricultural goods, and soft commodities. Facilities from $2 million. Advance rates up to 85 percent. Submit your inventory details and receive a structure recommendation within one business day.
Most commodity holders who meet the following criteria can access a facility within 2 to 4 weeks of submitting their deal. Check how many apply to you.
No upfront fee. Financely's arrangement fee is payable on completion only. All submissions are treated as strictly confidential.
Commodity inventory finance is a short-term borrowing arrangement secured against physical commodity held in storage. Instead of selling your stock to release cash, you pledge it (or sell and agree to repurchase it) as collateral for a loan or revolving credit facility. The lender advances a percentage of the inventory's net market value, typically 70 to 85 percent depending on commodity type, storage quality, and price volatility. When you sell the commodity, the facility is repaid and automatically becomes available to draw against the next inventory parcel.
The structure is self-liquidating: the commodity itself generates the repayment. This makes inventory finance significantly different from a conventional term loan, where repayment depends on the borrower's overall profitability and cashflow. For a commodity trader or processor with physical stock and a clear onward sales pathway, it is one of the most efficient forms of working capital available.
Two primary legal structures are used. Under a pledge structure, you retain title to the commodity but grant the lender a security interest over it. An independent collateral manager monitors the stock and issues a certificate that forms the basis of the advance. Under a repo (repurchase) structure, you sell the commodity to the lender at a discount and simultaneously agree to buy it back at a future date at the original price plus an agreed financing cost. Repo structures are often preferred where commodity law in the relevant jurisdiction makes pledge enforcement complex.
Key distinction: Commodity inventory finance is not the same as a standard inventory loan offered by a commercial bank. A commercial bank assesses your balance sheet and cash flow. A commodity inventory lender assesses the commodity itself: its grade, location, liquidity, price, and how easily it could be sold in a default scenario. Financely introduces you to lenders who have the specialist knowledge to underwrite commodity-secured transactions.
Have inventory ready to finance? Submit your commodity, volume, storage location, and documentation status and we will return a structure recommendation and indicative terms within one business day.
Submit Your DealLender appetite varies significantly by commodity. The most fundable inventories are those with deep, transparent markets, standardised grades, and established storage and logistics infrastructure. Below are the main categories Financely can arrange finance for, along with typical advance rates and tenor expectations.
Tank storage at recognised terminals (ARA, Fujairah, Singapore, Houston). Crude grades with active spot pricing (Brent, WTI, Dubai, ESPO). Refined products including diesel, jet fuel, fuel oil, and naphtha.
Advance: 75–85% · Tenor: 30–180 days · SOFR + 4.5–7.5%
LME-registered metals (copper, aluminium, zinc, nickel, lead, tin) stored in approved LME warehouses. Non-LME locations considered with independent assay and insurance. Precious metals handled separately.
Advance: 70–80% · Tenor: 30–120 days · SOFR + 4.0–6.5%
Wheat, corn (maize), soybeans, soybean meal, and soybean oil stored in certified grain silos or bonded warehouses. Warehouse receipts required. Seasonal concentration risk managed through tenor limits.
Advance: 65–80% · Tenor: 30–120 days · SOFR + 5.0–8.0%
Coffee (arabica and robusta), cocoa, sugar, and cotton held in certified warehouses with active ICE or LIFFE futures contracts providing mark-to-market pricing. Grade and origin documentation required.
Advance: 65–78% · Tenor: 30–90 days · SOFR + 5.5–8.5%
Urea, ammonia, DAP, and MAP stored in bulk terminals or covered warehouses. Methanol, ethanol, and base chemicals with established spot pricing. Requires recognised storage facility and quality certificates.
Advance: 65–75% · Tenor: 30–90 days · SOFR + 6.0–9.0%
LNG held in regasification terminals or FSRUs, and LPG in pressurised storage at recognised terminals. More complex to structure due to storage constraints and specialised infrastructure, but lender appetite exists for strong counterparty profiles.
Advance: 60–75% · Tenor: 30–60 days · SOFR + 5.5–8.0%
| Step | What Happens | Who Does It |
|---|---|---|
| 1. Submission | You submit commodity type, volume, storage location, documentation status, and financing requirement via the client portal. Financely reviews within one business day. | Borrower + Financely |
| 2. Structure Design | Financely recommends the appropriate legal structure (pledge vs repo), advance rate, tenor, and hedging requirements based on the commodity and lender market. | Financely |
| 3. Collateral Manager Appointment | An independent collateral management company (CMC) is appointed. The CMC inspects the commodity, confirms title, verifies grade and quantity, and issues a collateral certificate. | Borrower + CMC |
| 4. Lender Introduction | Financely introduces the transaction to 3 to 5 specialist commodity lenders. A credit memorandum covering the commodity, borrower profile, storage arrangements, and repayment pathway is submitted. | Financely + Lender |
| 5. Term Sheet | Lender issues a term sheet covering facility size, advance rate, rate, tenor, covenants, margin call triggers, and insurance requirements. Financely advises on terms and negotiates on your behalf. | Lender + Financely |
| 6. Legal Documentation | Pledge agreement or repo confirmation, security documents, and collateral management agreement executed. Conditions precedent (insurance, hedging, KYC) satisfied. | Lawyers + Borrower |
| 7. First Drawdown | Advance released to borrower. CMC continues to monitor inventory daily. Borrower may draw and repay as inventory sells, subject to the borrowing base calculation. | Lender + Borrower |
The single most important element of any commodity inventory finance transaction is the collateral management arrangement. Without it, the lender has no reliable way to verify that the commodity exists, that it meets the required grade, that it is stored in a suitable facility, or that you have not already sold or pledged it to another party.
A collateral manager is an independent third party engaged by the lender (with your cooperation) to physically inspect and monitor the commodity throughout the loan term. Their responsibilities typically include daily or weekly stock counts, quality checks, access control to the storage facility, insurance verification, and issuing periodic collateral reports to the lender.
The major commodity collateral management firms operating internationally include SGS, Bureau Veritas, Cotecna, and Inspectorate. For storage in LME-approved warehouses, the warehouse operator itself provides much of this function. Financely maintains working relationships with collateral managers across the major commodity storage hubs and can facilitate the appointment as part of the transaction setup.
Common reason for declined applications: Inventory held in borrower-controlled or unaudited storage without an independent collateral manager in place, or in a jurisdiction where enforcing security over commodities is legally complex. If your inventory is not yet under independent custody, we can help you prepare the collateral management arrangement before approaching lenders.
Pricing depends primarily on commodity type, storage quality, borrower credit profile, and the liquidity of the local market for the commodity. The table below shows indicative ranges based on transactions Financely has arranged.
| Commodity Category | Max Advance Rate | Indicative Rate | Max Tenor | Minimum Value |
|---|---|---|---|---|
| Crude Oil / Products | 85% | SOFR + 4.5–7.5% | 180 days | $2M |
| Base Metals (LME-registered) | 80% | SOFR + 4.0–6.5% | 120 days | $2M |
| Grains and Oilseeds | 80% | SOFR + 5.0–8.0% | 120 days | $2M |
| Soft Commodities | 78% | SOFR + 5.5–8.5% | 90 days | $2M |
| Fertilisers / Petrochemicals | 75% | SOFR + 6.0–9.0% | 90 days | $3M |
| LNG / LPG | 75% | SOFR + 5.5–8.0% | 60 days | $5M |
All rates are indicative as of Q1 2025 and are subject to lender credit approval and commodity price conditions at the time of underwriting. Lenders also typically require price hedging to be in place or apply a haircut to the advance rate to cover price risk. Financely can advise on hedging requirements for your specific commodity.
Ready to get an indicative offer? Submissions take under 5 minutes. Provide your commodity, storage location, volume, and documentation status and we will respond within one business day with a structure and indicative terms.
Get Indicative TermsFor a borrower with clean documentation, a recognised storage facility, and an independent collateral manager already in place, the timeline from first submission to first drawdown is typically 2 to 4 weeks. The main time-consuming steps are KYC and AML clearance by the lender, collateral manager appointment and initial stock inspection, and legal documentation. If the collateral management and storage arrangements are not yet in place, add 1 to 2 weeks. Transactions involving new borrowers, complex ownership structures, or non-standard storage facilities take longer.
Most commodity inventory finance facilities include a margin call mechanism. If the market value of your pledged inventory falls below a defined threshold (typically the advance value plus a buffer), the lender will issue a margin call requiring you to either provide additional commodity as collateral, repay part of the facility, or provide cash margin. This is why lenders apply an advance rate below 100 percent: it creates a cushion against price moves before a margin call is triggered. To manage this risk, lenders commonly require the borrower to hedge the price exposure using futures contracts on a recognised exchange. Financely will advise on the hedging requirement as part of the structure design.
Yes, but the terms and advance rate will reflect the additional risk. Commodity lenders are active in key emerging market storage hubs including Lagos, Mombasa, Dubai, Mumbai, Jakarta, and ports across West Africa and Latin America. The critical requirements are that a recognised collateral manager can be appointed in that location, that the legal framework allows effective pledge enforcement, and that the storage facility meets the lender's standards. Transactions in jurisdictions with weak property rights, unreliable courts, or no established commodity lending market are significantly harder to place and may attract lower advance rates and higher pricing.
Under a pledge structure, you retain legal ownership of the commodity and grant the lender a security interest (a charge or pledge) over it. If you default, the lender can sell the commodity to recover the advance. Under a repo structure, you sell the commodity to the lender outright and simultaneously agree to buy it back at a set date for the original price plus a financing margin. In a repo, the lender legally owns the commodity for the duration of the transaction, which eliminates uncertainty about enforcement in many jurisdictions. Repo structures are often used in emerging markets or where local commodity pledge law is untested. The economic effect is similar; the legal and accounting treatment differs. Your lawyers should advise on which structure is appropriate for your jurisdiction and balance sheet.
Not necessarily before applying, but almost certainly before drawdown. Most commodity inventory lenders will require you to hedge all or part of the price exposure on your pledged inventory as a condition of drawdown, particularly for commodities with significant volatility such as crude oil, metals, and soft commodities. The hedging is typically done through exchange-traded futures and is designed to protect both the lender's recovery value and your ability to repay. For agricultural commodities with a natural selling season, lenders may accept a tolling or forward sale instead of an exchange hedge. Financely will outline the hedging expectation during the structure advisory stage so you can prepare before the lender's conditions precedent are issued.
No. Double-pledging the same inventory to two or more lenders simultaneously is fraud and one of the most serious risks in commodity finance, most prominently illustrated by the Qingdao metals fraud of 2014. The collateral manager's role is specifically to prevent this by maintaining sole access to and control over the pledged stock. Lenders perform title searches and require the collateral manager to confirm that no prior security interest exists over the inventory. If you have existing facilities or security interests over any part of your inventory, these must be disclosed at the outset and cleared before a new facility can be put in place.
Submit your deal through the Financely client portal. Tell us your commodity, volume, current storage location, documentation status, and how much you want to borrow. We will review it the same day, provide a structure recommendation and indicative terms, and introduce you to the right lenders. There is no upfront fee and no obligation to proceed.
Already have a specific structure in mind? Our structured commodity finance service covers pre-export finance, borrowing base facilities, and offtake-backed debt alongside inventory finance.
Financely Group acts as arranger and adviser only and does not provide credit, capital, or regulated financial services directly. All facilities are subject to lender credit approval, regulatory compliance, and commodity price conditions at the time of underwriting. Indicative rates, advance rates, and tenors are not guaranteed and may differ from final lender terms. This page does not constitute financial advice. Commodity inventory finance involves material risks including commodity price falls, margin calls, and potential loss of collateral. Borrowers should seek independent legal and financial advice before entering into any inventory finance arrangement. Financely does not engage with transactions involving sanctioned parties, jurisdictions, or commodities under applicable OFAC, UN, EU, or UK sanctions regimes.
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