Raising Collateral for Letters of Credit: How Sponsors Cover the Margin
Raising Collateral for Letters of Credit: How Sponsors Cover the Margin
Letters of credit (LCs) don’t get issued for free. Banks demand margin. That margin—typically 10% to 30% of the face value—has to be posted upfront. For sponsors and traders running tight operations, tying up liquidity at this scale creates a serious problem. That’s where Financely steps in. We help raise collateral, underwrite the structure, and distribute the opportunity to private capital providers ready to fund margin requirements.
Why Margin Is a Roadblock in Trade
Margin is non-negotiable. Whether you're importing commodities, fulfilling an EPC contract, or closing a large supply deal, banks require margin to issue the LC. Without it, your transaction stalls. But tying up your own liquidity is not always possible or smart—especially when capital is needed for production, logistics, or upfront costs tied to the trade cycle.
Private Capital for Margin Funding
Margin funding exists. The problem is most sponsors don’t know where to find it or how to structure it properly. Private lenders and funds will support margin obligations if the underlying transaction is real, well documented, and offers predictable repayment on exit. These groups back deals, not slides.
Margin-backed notes, secured short-term debt, and structured advances are common solutions. Each option gives the sponsor immediate liquidity to meet the bank’s margin demand while protecting their working capital for other parts of the trade or project.
How Financely Makes These Deals Fundable
Financely works directly with sponsors to underwrite the margin need. We assess the deal file, review buyer and supplier contracts, confirm logistics and payment timelines, and structure the required facility. Once the file is packaged, we distribute it to our network of private credit desks, funds, and non-bank lenders familiar with LC-backed flows.
These desks fund margin calls when they trust the exit. That’s why underwriting matters. If the shipment is verified, the buyer is real, and the payment terms align, private capital steps in fast—often within 7–15 days from submission.
Need to Raise Margin for a Letter of Credit?
Financely structures and distributes real trade finance margin deals to capital desks. Submit your file and we’ll underwrite it today.
Submit a Deal Book a CallThe Bottom Line
LCs move global trade. But without margin, they don’t get issued. Financely helps sponsors and trade operators raise the collateral they need without tying up core liquidity. If your deal is ready and the buyer is real, we’ll get it underwritten and placed with private capital—so you can focus on executing, not chasing banks.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
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Disclaimer: Financely provides financing based on due diligence and feasibility. Approval is not guaranteed, and past performance does not predict future outcomes. All terms are subject to review. Financely primarily assists with structuring and distribution. Qualified parties carry out the project if the client approves the proposal.
