How To Secure Trade Finance
How To Secure Trade Finance
What Lenders Actually Fund
- Commercial LCs (UCP 600): Issuing bank undertakes to pay on compliant presentation. Used for import flows.
- Standby LCs (ISP98): Payment or performance backstop with objective draw language.
- Receivables Finance: Advances on invoices with or without recourse, often supported by credit insurance.
- Supply Chain Finance: Early supplier payment against buyer approval. Buyer pays bank at maturity.
- Credit Insurance: Named obligor limits that improve advance rates. Terms must match facility reporting.
- Confirmation/Aval: Converts counterparty risk into bank risk in a relevant jurisdiction.
- Inventory Controls: Collateral management agreements and warehouse receipts where custody matters.
Phase 1 — Intake And Underwriting
You submit a complete RFQ with executed contracts, corporate KYC, AR/AP aging, twelve months bank statements, and draft LC or insurance terms if used. We validate counterparties, map the trade cycle, size limits, test cash conversion, and flag gaps. You get a clear go or a fix list.
Submit RFQ — Trade FinanceWhat Credit Teams Care About
Clean KYC for buyer and supplier, beneficial owners disclosed, sanctions checks clear, jurisdictions within appetite. Opaque ownership or shell buyers kill files.
Trade EconomicsSigned purchase and sale contracts, Incoterms, quantity, price, delivery, and payment terms. Landed cost and margin stack that survives finance costs.
Track record in the product, named forwarders, cargo insurance, and a logistics plan that matches the paper. Inventory and custody controls where relevant.
Repayment SourcePrimary source is customer collections. Secondary sources include LC proceeds, SBLC draw, insurance claim proceeds, or pledged cash.
Days inventory, days receivable, days payable, and buyer concentration. Oversized single-buyer exposure must be covered by limits or additional security.
Financial CapacityAudited statements preferred, tax compliance, stable gross margins, and enough equity to support the facility.
Documents That Move Decisions
- Incorporation docs, share register, UBO IDs, tax certificates
- Three years financial statements plus YTD management accounts
- Twelve months bank statements
- AR and AP aging with top buyers and suppliers
- Executed purchase and sale contracts with Incoterms
- Draft LC or SBLC wording if used
- Marine cargo insurance certificates and endorsements
- Warehouse or collateral control agreements if inventory is funded
- Credit insurance policy and approved buyer limits if applicable
- Sanctions screenings and company searches for all counterparties
Phase 2 — Structuring And Wording Control
We align LC terms under UCP 600 and SBLCs under ISP98 with objective conditions. We remove clauses that create subjective disputes. If you use credit insurance, we make sure policy notifications, assignments, and reporting match the facility, so coverage works in practice.
The Approval Path That Works
RFQ And Data Room
Complete intake with the documents above. Partial files stall. Complete files move.
Underwriting
100 to 200 working hours. We size limits, model the cycle, test security, and raise red flags early so fixes are fast and targeted.
Indicative Term Sheet
Facility type, limits, pricing, tenor, collateral, covenants, conditions precedent, and reporting cadence. LC or policy forms attached where relevant.
Documentation
Facility agreement, security, assignments of proceeds, LC templates, insurance endorsements, KYC refresh. Small edits can alter enforceability.
Conditions Precedent
Fees funded, policies bound, operational testing in place, draw mechanics trialed, and wording locked.
Drawdown And Monitoring
Shipment tracking, document checks, covenant reporting, and borrowing base tests by cycle.
Costs And Pricing Without Spin
| Item | What It Covers | How It Behaves |
|---|---|---|
| Underwriting Retainer | Analyst and banker time to produce a bankable package | One-off per mandate or scope, payable before placement |
| Facility Margin | Risk premium over a base rate | Driven by tenor, counterparty quality, structure, and controls |
| LC Issuance/Confirmation | Issuance fee and, if required, confirmation fee | Quoted per 12 months and pro rated by tenor; jurisdiction sensitive |
| Insurance Premiums | Named obligor coverage for non-payment | Priced by obligor risk, country, tenor, concentration, claims history |
| Legal And Ops | Drafting, negotiations, onboarding, collateral perfection | One-off and recurring where documents or limits change |
There is no credible path that avoids professional costs. Requests that reject retainers and due diligence while asking for lines are declined.
Phase 3 — Placement And Execution
With structure and wording locked, we place with banks, confirmers, and insurers that fit the product and lane. We negotiate terms that reflect real risk and keep cycles repeatable. First runs are monitored closely before scaling limits.
Explore Structured Commodity FinanceLCs, SBLCs, Insurance — Getting The Mechanics Right
Presentation requirements must be objective and aligned with the shipment plan and Incoterms. If the exporter needs early funds, discounting or negotiation is arranged in parallel with confirmation where required.
Follow ISP98 with precise draw statements and measurable triggers. Expect collateral or strong balance sheet support. Keep conditions objective to avoid disputes.
Secure buyer limits early. Align policy notices, reporting, and claim timelines with the facility. Assign proceeds cleanly to the lender. A policy that is not integrated is a weak backstop.
Example — LC-Backed Import Cycle
Scenario. EU importer purchases USD 5,000,000 of finished goods on CIF terms against a 120 day usance LC. Goods are resold to multiple EU buyers on 45 day terms. Exporter requests confirmation and discounting.
Structure. Issuing bank opens a 120 day LC. Exporter ships and presents compliant documents. Confirming bank discounts the accepted draft and pays the exporter at shipment. Importer sells inventory, collects by day 75 to day 90, and repays at day 120. Security includes assignment of receivables, inventory controls where practical, and locked LC wording.
Why this clears credit. Clean shipment history, named buyers with limits, pre-cleared LC template, and margin that covers confirmation, discounting, and a buffer.
How To Make Your File Bankable
Focus on one product line per mandate when possible. Keep lanes consistent. Repeatable cycles scale better and price tighter.
Prove The MarginShow landed cost, duties, logistics, and resale price with third-party evidence. If margin cannot carry finance costs and a buffer, the facility will not hold.
Lock The PaperExecute contracts. Align Incoterms. Names and addresses must match. Sloppy paper creates discrepancies and delays.
If one buyer is most of sales, secure insurance or add collateral and controls. Diversification should be real, not theoretical.
Clean ComplianceResolve tax gaps. Keep UBO information current. No bank risks its license on a messy file.
Pilot Then ScaleStart with a smaller run. Demonstrate collections. Use that track record to negotiate higher limits.
Common Deal Killers
- Trying to bypass intake with a one-line partnership message
- Unsigned or vague contracts that shift terms mid-process
- LC templates with subjective conditions or inconsistent data fields
- Opaque ownership, weak buyer names, or shell counterparties
- Late surprises in logistics or a moving product definition
Phase 4 — Monitoring, Reporting, And Scale-up
After first draw, we track documents, borrowing base tests, and covenant reporting. If performance matches plan, we request limit increases and broader buyer coverage. Variance is handled early before it compounds.
Read FAQs Before You ApplyTimelines You Can Plan Around
- Week 0. RFQ complete and data room uploaded.
- Week 1 to 2. Underwriting first pass, Q&A, counterparty checks, preliminary sizing.
- Week 3. Indicative term sheet.
- Week 4 to 6. Documentation, LC or SBLC text clearance, insurance endorsements, operational testing.
- Week 6 to 8. First draw if conditions are met and operations are ready.
Timelines slip when documents arrive piecemeal or LC text goes through repeated edits. Bring final versions early and keep structure stable.
If You Rely On Credit Insurance
Approved buyer limits must be in place before you present the deal. Do not assume limit size without confirmation.
Align ReportingPolicy notices, overdue reporting, and claim steps must match the facility. Misalignment creates claim risk.
Assignments should reflect lender requirements. Keep endorsements precise. Avoid wording that introduces ambiguity.
Claims Are Evidence-BasedPayment follows policy conditions and paperwork accuracy. Insurance is support, not a shortcut.
Frequently Asked Questions
No. Underwriting consumes serious time. Without it there is no credible submission to any regulated counterparty.
Only if your financials, track record, and structure support it. Otherwise expect cash margin, guarantees, or tighter controls.
No. Credit decisions are document-based. Intent is not enough.
Insurance pays when policy conditions and paperwork are satisfied. It is a tool to manage risk, not a guarantee of outcome.
Before You Apply
Have executed contracts, a clear lane, and a repeatable cycle. The fastest approvals come from complete files with clean wording and stable logistics. Use the RFQ link above to start the process, explore structured commodity finance for commodity-heavy trades, and read the FAQ to align expectations before intake.
Financely is a capital advisory. We are not a bank. All transactions are subject to due diligence, underwriting, counterparty approvals, documentation, and compliance reviews. We do not guarantee issuance or provide free assessments. Mandates proceed on a retained basis and only through the formal intake process.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
All submissions are
promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.
Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
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