How To Model and Underwrite Trade Finance To Win Lender Approval
Here’s the playbook. We build the model, write the credit memo, design the borrowing base, and run a targeted lender process. The objective is clear: a structure that ships, pays, and holds up in credit committee.
Snapshot:
Underwriting, stress-tested modeling, LC/SBLC terms and documentary controls, receivables and inventory borrowing bases, collateral and insurance setup, lender distribution, and closing with counsel. First pass in 10–15 business days after full documents and cleared payment. Best efforts. No guarantees.
Where We Add Value
Underwriting & Credit Memo
Counterparty analysis, cash-flow mapping, risk mitigants, conditions precedent, and a lender-ready memo that answers the hard questions.
Model & Stress Testing
Dated cash posts, borrowing-base math, FX/price shocks, delay cases, quality downgrades, and insurance claim timing.
Borrowing Base Design
Eligibility rules, advance rates, concentration caps, reserves, daily MTM logic, and clean-down requirements lenders accept.
LC/SBLC & Documentary Controls
UCP 600/ISP98 terms, document lists, presentation periods, charges clauses, and confirmation options to cut discrepancy risk.
Collateral, Insurance, & Hedging
Title and possession mechanics, TRA/blocked accounts, CMA/field monitor, loss-payee endorsements, and hedge setup where needed.
Distribution & Closing
Targeted outreach to banks, DFIs, private credit funds, and confirming banks. We handle term sheets and closing with counsel.
Facility Types We Cover
Type |
What We Do |
IDLC & Confirmed LC |
Draft MT700 fields, align Incoterms and docs, arrange advising/confirmation where available, manage amendments (MT707) if required. |
SBLC (ISP98) |
Payment/performance undertakings with collateral or cash cover planning and clear draw conditions. |
Receivables Finance |
True sale or assignment, aging limits, dilution reserves, lockbox controls, and debtor concentration caps. |
Inventory Borrowing Base / Repo |
Eligibility, valuation at lower of cost or market, CMA, stock throughput insurance, and daily MTM with margin calls. |
Pre-Export / Prepayment |
Milestone-linked disbursements, offtake tie-in, ring-fenced cash, and step-in/assignment rights. |
Borrowing Base Mechanics That Lenders Respect
Component |
Rule of Thumb |
Eligible A/R |
≤ 90 days aging, verified debtor, set-off limits, advance rate tied to buyer quality and dilution history. |
Eligible Inventory |
Unencumbered, insured, monitored; apply grade/basis haircuts and location rules; daily MTM. |
Reserves & Caps |
Concentration, FX, freight, duties/taxes, and disputed items sit in reserves. Availability triggers and clean-downs protect the lender. |
Risk Controls That Protect Draws
- Title & Possession:
Warehouse receipts, pledge filings, and trust receipts with clear custody.
- Account Control:
TRA/blocked accounts, sweep logic, and waterfall discipline.
- Third-Party Eyes:
CMA/field monitor, inspection SLAs, random spot checks, and serial verification of documents.
- Insurance:
ICC(A) + war/strikes, stock throughput, credit insurance where used, lender loss-payee endorsements.
- Hedging:
FX/commodity coverage with margin call funding modeled in the cash plan.
Process and Typical Timeline
- Application & Screening.$500 application. KYC and sanctions checks. Scope and fee quote. 1–3 business days.
- Underwriting & Model.
Retainer paid. Credit memo, model and stress cases, LC/facility terms, CP checklist, distribution list. 10–15 business days after full documents.
- Soundings.
Discreet checks with target lenders to confirm appetite and ranges. ~1 week.
- Distribution.
Staged outreach to banks, DFIs, private credit funds, and confirming banks. 2–4 weeks to indicative terms on straightforward files.
- Term Sheet.
Negotiate pricing, covenants, reserves, collateral, and confirmation if needed. 1–2 weeks.
- Documentation & Closing.
Bank KYC, legal drafts, SPV if used, trustee/paying agent, filings, CPs. 2–8 weeks by jurisdiction.
Who We Approach
Public and private banks, DFIs and MDBs, private credit funds, confirming banks, and insurance-backed programs matched to corridor, currency, tenor, collateral, and risk limits. We don’t present banks as partners. Allocation depends on appetite at the time of outreach.
Compliance & Regulatory
- Advisory Role.
We act as an arranger and corporate finance advisor. We are not a bank or direct lender.
- Securities Activity.
Where a transaction involves securities, activity is conducted through and chaperoned
by a U.S. SEC and FINRA-registered broker-dealer under SEC Rule 15a-6, or via FCA/MiFID II partners as applicable. Offers are limited to eligible investors under exemptions such as Regulation D.
- Best Efforts.
No guarantees on issuance, pricing, or timing. Bank appetite and rules change without notice.
Talk To Us About Trade Finance Underwriting
Submit your intake. After KYC clearance, we issue the invoice. Underwriting starts when payment clears.
Submit Intake Form
We provide arranging and advisory services to corporate clients. This page is not a solicitation to buy or sell securities and is not a commitment to lend. Services are subject to engagement, underwriting, KYC/AML/sanctions screening, and counterparty appetite. Pay only to bank details on our official invoice. We do not accept crypto payments.