When a deal is structured, every party involved—whether it’s the underwriter, lender, or issuing bank—expects capital on the table from day one. You can’t build a house without paying the architect. You can’t get an insurance policy without a premium. And you definitely can’t expect to secure a multi-million dollar trade finance instrument without covering the necessary costs upfront.
Imagine this: a trader looking to secure a $10M Standby Letter of Credit (SLOC) for a gold transaction approaches us with what he believes is a “win-win” proposal. He wants us to underwrite his deal upfront, structure the transaction, and source lenders—all on the condition that he’ll only release our fees from escrow after the SLOC is issued.
Sounds great for him. For us? A complete waste of time.
The reasoning behind this request is almost always the same: “Why should I pay for underwriting if I don’t know whether my SLOC will be issued?” The logic is flawed from the ground up. Underwriting isn’t a conditional service. It’s an essential, front-loaded process that determines whether your deal is even bankable in the first place.
If you already have access to trade credit, go directly to a bank and pay their issuing fees. No need to waste time in the private debt market. But if you’re knocking on our door, it means your deal requires structuring and external investors—which means there’s work to be done, and that work isn't free.
Let’s break down why escrowing underwriting fees makes zero financial sense.
Our team spends hours dissecting your deal:
This process takes expertise, time, and resources. Expecting us to work for free and only get paid if your SLOC is issued is like asking an architect to design your house and only getting paid if the bank approves your mortgage. It’s not how serious business is done.
A multi-million dollar commodity deal isn’t something you approach half-heartedly. If you can’t afford to pay the underwriting fees, what does that say about your financial standing? Investors and lenders look at commitment first. Escrowing fees signals indecision and uncertainty—both red flags that make your deal harder to fund.
If you need a $10M SLOC and you can’t even commit to underwriting fees, what does that say about your ability to execute the trade?
In trade finance, risk is always shared. Banks, investors, and lenders all expect skin in the game. If you’re attempting to push all the financial risk onto the underwriter, what exactly is your role in the deal?
We’re not here to absorb the risk of your transaction. We have our own capital, our own trades, and clients who are ready to do business the right way. If we wanted to take speculative risks, we’d finance our own transactions—not underwrite someone else’s deal for free.
Let’s be blunt: work already completed needs to be paid for. The underwriting process doesn’t start when your SLOC is issued; it starts the moment we begin assessing your deal.
Negotiating an escrow arrangement is just a fancy way of asking for free labor. If we work through your transaction, underwrite it, and it turns out that your deal isn’t bankable, we still invested our time, expertise, and resources. That’s exactly why underwriting fees are non-refundable.
Think about this from an investor’s perspective. You’re asking them to tie up cash to back your SLOC. Why would they do that for a deal where the originator isn’t willing to put their own capital on the line?
Trade finance isn’t just about having a commodity to buy and resell—it’s about having a properly structured deal with collateral. If your deal is solid, structured, and profitable, it will get funded. If it’s not, then no amount of escrow payments will change that.
If your deal already qualifies for trade credit, go straight to the bank and pay the issuing fees. But if you’re in the private debt market, underwriting fees exist for a reason—they cover the expertise needed to make your deal bankable in the first place.
So before you ask us to underwrite your SLOC “on contingency”, ask yourself:
We work with professionals who understand the game. If you’re serious, let’s do business. If not, there’s no point in wasting time. Trade finance isn’t about wishful thinking—it’s about real capital, real risk, and real commitment.
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