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Physical commodity trading only works when the money moves with the goods. A trader buys a cargo, carries the price, freight and counterparty risk for weeks or months, and gets paid when the buyer pays. Structured trade and commodity finance is the set of lending techniques that funds that gap by securing the lender on the commodity, the contracts and the cash flows of the trade itself, rather than on the borrower's balance sheet alone.
Financely is an advisory and arranging firm. We do not lend, and we do not issue bank instruments. We assess commodity transactions, structure them the way credit committees expect to see them, build the lender-ready package, and place it with banks, trade finance funds and private credit lenders from a network of more than 12,700 verified lenders. This guide explains how the market works, what lenders test, and exactly what you receive when you engage us.
In this guide
A corporate loan is underwritten on the borrower: its accounts, its leverage, its group cash flow. Structured trade and commodity finance (STCF) is underwritten on the transaction. The lender funds a defined flow of goods, takes security over the commodity, the sale contract and the receivable, and is repaid from the sale proceeds of that same flow. The loan is designed to repay itself when the cargo is sold.
That is why mid sized traders and producers can raise more through STCF than their balance sheet would support. A lender who controls title, monitors the goods through a collateral manager and receives the buyer's payment into a controlled account is taking commodity and performance risk, not unsecured credit risk. The trade-off is discipline. The structure only holds if documents, logistics and cash routing are exactly as described in the credit paper.
The market matters because conventional supply is short. The Asian Development Bank's 2023 Trade Finance Gaps, Growth, and Jobs Survey put the global gap between requested and approved trade finance at a record USD 2.5 trillion in 2022, up from USD 1.7 trillion two years earlier. Banks cited higher rates, inflation and geopolitical risk for pulling back. Non bank lenders have filled part of that space, and they are the lenders most open to well structured mid market commodity deals.
Each group carries a different risk profile, and lenders price and haircut them differently. Knowing where your flow sits tells you which lenders to approach and which controls they will ask for.
Crude oil, refined products such as diesel, jet fuel and fuel oil, LNG and LPG. Deep benchmark pricing and liquid hedging markets make energy the most financeable group, but cargo values are large and fraud in broker chains is widespread. See our guides to LNG trade finance and EN590 trade finance.
Base and precious metals, ores and concentrates. Refined metals price off LME or COMEX and hedge cleanly. Concentrates need assay controls, payable metal calculations and offtake security. See base metals trade finance and copper concentrate financing.
Grains, oilseeds, sugar, coffee, cocoa and edible oils. Seasonality, weather and phytosanitary rules drive quality and timing risk, which is why pre-harvest and pre-export structures dominate. See grain trade finance, sugar trade finance and cocoa trade finance.
Fertilizers, petrochemicals, polymers and other industrial inputs. Hedging is often limited, so lenders lean harder on buyer credit, contract terms and inventory control. See fertilizer trade finance.
A physical trade has a cash gap at every stage between paying the supplier and collecting from the buyer. Matching the right structure to each stage is the first thing we do on any mandate, because using the wrong tool is the most common reason a fundable trade gets declined.
| Stage of the trade | Funding need | Structures that usually fit |
|---|---|---|
| Production and origination | Working capital for the producer to mine, grow or refine before export | Pre-export finance, prepayment from an offtaker |
| Purchase from supplier | Paying the supplier before the trader is paid by the buyer | Transactional trade loans, back-to-back structures, documentary payment terms |
| Storage at origin or destination | Carrying stock while waiting to ship or sell | Warehouse receipt finance, inventory finance, repo |
| Transit | Carrying the cargo while it is at sea or in transport | Transactional finance secured on title documents and insurance |
| Sale and collection | Waiting for the buyer to pay on deferred terms | Receivables purchase, credit-insured receivables finance |
| Recurring flows across the book | Revolving funding across many trades at once | Borrowing base facilities |
Pre-export finance (PXF). A lender advances funds to a producer and is repaid from the proceeds of future exports under assigned offtake contracts. It suits established producers with a creditworthy offtaker and a track record of shipping. Read the full guide to pre-export finance for commodity producers.
Prepayment finance. The offtaker, usually a trader, pays the producer in advance for future deliveries, and often funds that prepayment through its own lenders with the offtake and receivables assigned as security. It secures supply for the trader and liquidity for the producer. See prepayment finance in commodity trading.
Borrowing base facilities. A revolving line where availability is recalculated regularly against eligible inventory, receivables and hedged positions, each with its own advance rate and concentration limit. This is the standard facility for a trader with a running book. See borrowing base facilities for physical commodity traders.
Warehouse receipt and inventory finance. Stock held in an approved warehouse under a collateral management agreement, with the lender controlling release. It turns stored goods into working capital. See warehouse receipt financing and collateral management agreements.
Transactional and back-to-back trade finance. Trade by trade funding of a specific purchase, repaid when the matched buyer pays. It suits traders with confirmed buy and sell contracts but limited capital. See back-to-back commodity financing and financing a back-to-back trade without a bank relationship.
Offtake-backed and repo structures. Offtake financing uses a long term sale contract as the anchor for funding production or expansion. Repo lets a holder of stored metal or product sell it to a financier with an agreement to buy it back, releasing cash against inventory. See structured offtake financing and metal repo financing.
Every commodity credit committee works through the same six questions. A package that answers them up front moves quickly. One that leaves them open is parked or declined.
| Risk the lender tests | What they need to see |
|---|---|
| Performance risk | Evidence the supplier can deliver the stated volume and quality, shipping history, inspection arrangements |
| Counterparty risk | Identity and credit standing of supplier and buyer, payment history, credit insurance where available |
| Collateral control | How title passes, who holds documents, collateral manager or inspection agent, insurance with lender loss payee |
| Price risk | Hedging policy, hedge instruments used, position limits and how margin calls are funded |
| Cash control | Collection account structure, assignment of proceeds, waterfall from buyer payment to lender repayment |
| Jurisdiction and compliance | Country risk at origin and destination, sanctions screening, KYC on all parties including beneficial owners |
Contracts and Incoterms sit under all six. The lender needs to see exactly where risk and title pass, when payment is triggered, and what happens if a cargo is late, off spec or rejected.
A trader that leaves positions unhedged is taking an outright price bet, and lenders will not fund a price bet. Most professional desks lock in the physical margin and hedge flat price through futures on CME, ICE or LME, through OTC swaps for custom tenors, or through options when they need to cap downside.
The risk that remains is basis risk. A hedge references a standard grade, location and delivery month. The physical cargo rarely matches all three. Lenders look for a written hedging policy, daily mark to market reporting and a clear plan for funding margin calls. For commodities without an exchange contract, such as many concentrates, the structure has to manage price risk through contract pricing periods and offtake terms instead. Our guide to how physical commodity traders hedge covers the main strategies.
Why most commodity finance requests are declined. In our experience the trade itself is rarely the problem. Requests fail because the supplier cannot be verified, the deal sits at the end of a broker chain with no direct mandate, there is no hedging policy, the buyer is unidentified, or the documents describe a flow that does not match how the goods will actually move. Offers to fund trades through leased SBLCs, "pre-advised" instruments or bank-to-bank transfers are not trade finance. Lenders reject them, and so do we. See our analysis of fake EN590 and fuel broker chains and ICUMSA 45 sugar scams.
Financely acts on the borrower's side as advisor and arranger. We are not a lender, a bank or a broker-dealer, and we do not issue, lease or monetize bank instruments. Our role is to turn a real commodity flow into a credit proposition a lender can approve, and then to run the process of getting it funded.
We work with producers, exporters, importers, physical traders and industrial buyers with verifiable contracts, real supply and a management team that will go through KYC. We do not take on intermediary chains without a direct mandate, instrument monetization, or deals where the parties cannot be identified.
Execution always sits with the lender. Each facility is approved by the lender under its own credit process, documentation and conditions precedent. What we control is the quality of what the lender receives and the speed of the process, and those two factors decide most outcomes. See what we do and our regulatory posture and disclosures.
Every engagement starts with a paid deal assessment and, where the deal is financeable, moves into our fixed fee Lender-Ready Package. These are the deliverables.
A review of your contracts, counterparties, logistics and financials, with a written view on whether the trade is financeable, which structure fits, the main gaps to close and the lender types to target. The trade finance deal assessment costs USD 500 and is credited against later engagement fees if you proceed.
A transaction structure setting out the facility type, flow of goods, title transfer points, document flow, cash routing, collection accounts and security package, with a one page diagram a credit officer can read in minutes.
A lender-format trade finance underwriting memo covering the borrower, counterparties, commodity, risks and mitigants, repayment sources and the requested terms, written the way credit committees read.
A transaction or borrowing base model showing funding need per trade, advance rates, margins, costs, sensitivity to price and timing, and repayment from proceeds, so the lender can test the numbers rather than take them on trust.
Recommended collateral manager or inspection arrangements, insurance with lender loss payee, hedging policy review, concentration limits and reporting the lender will receive.
Corporate documents, ownership and beneficial owner information, counterparty KYC and sanctions screening organised to the standard lenders' compliance teams expect, so onboarding does not stall the deal.
A draft structured trade finance term sheet setting out the facility you are asking for, so lenders respond to a defined request instead of an open question.
A targeted lender list drawn from our network, managed outreach, Q&A handling, comparison and negotiation of term sheets, and coordination of conditions precedent with your counsel through to first drawdown.
| Step | What happens |
|---|---|
| 1. Request an estimate | You share the transaction details. We confirm fit and send a written estimate with scope and fee. |
| 2. Deal assessment | We review documents and counterparties and tell you plainly whether the deal is financeable and what must change. |
| 3. Lender-Ready Package | On a fixed fee paid upfront, we build the structuring paper, credit memo, model, control plan, KYC pack and term sheet. |
| 4. Lender placement | We approach the lenders whose mandate, ticket size and jurisdiction fit the deal, and manage their questions. |
| 5. Term sheets and negotiation | We compare offers on cost, advance rate, covenants and conditions, and negotiate on your behalf. |
| 6. Closing | The lender completes its credit approval and documentation. We track conditions precedent until funds are available. |
For the full process and decisioning standards, see how it works.
The faster you can provide the items below, the faster a lender can say yes. Our trade finance fundability assessment tests each one.
| Topic | Guides |
|---|---|
| Producer finance | Pre-export finance, prepayment finance, offtake agreement financing |
| Trader facilities | Borrowing base facilities, private debt for commodity traders, back-to-back financing |
| Inventory and collateral | Warehouse receipt financing, warehouse vs tank receipt financing, collateral management agreements |
| Commodity specific | Iron ore, copper concentrate, grains, LNG, fertilizers |
| Case studies | Copper concentrate from the DRC, Uganda to UK cocoa trade |
| Term sheets | Structured trade finance term sheet, commodity trade finance term sheet |
Send us the transaction and we will tell you whether it is financeable, which structure fits and what lenders will need. You receive a written estimate with scope and fee before any work starts.
If your deal has already been declined, send it anyway. Most declines come from how the deal was presented, and that can be fixed.
It is lending that funds a specific flow of physical goods and is repaid from the sale of those goods. The lender secures itself on the commodity, the sale contracts, the receivables and the cash collection account, rather than relying only on the borrower's balance sheet. Common structures include pre-export finance, prepayment, borrowing base facilities, warehouse receipt finance and transactional trade loans.
No. Financely is an advisory and arranging firm. We assess and structure transactions, prepare the lender-ready package and place it with banks, trade finance funds and private credit lenders. Facilities are provided by those lenders under their own approvals. We do not issue, lease or monetize bank instruments.
A transaction structuring paper and flow diagram, a lender-format credit memo, a transaction or borrowing base model, a collateral and risk control plan, a KYC and compliance pack, an indicative term sheet, and lender placement with term sheet negotiation and closing support.
The deal assessment costs USD 500 and is credited against later engagement fees if you proceed. The Lender-Ready Package is a fixed fee paid upfront, quoted in a written estimate once we have seen the transaction. The fee depends on deal complexity, number of counterparties and jurisdictions involved.
Yes, if the trade is real and well controlled. Lenders care less about size than about verified counterparties, enforceable contracts, collateral control and hedging. A new trader with a strong buyer, a credible supplier and a tight structure can be financed. A trader at the end of a broker chain usually cannot.
A corporate loan is underwritten on the group's balance sheet and repaid from general cash flow. Commodity trade finance is underwritten on the transaction and repaid from the defined proceeds of the goods being financed. That is why title, storage, inspection, insurance and hedging form part of the credit analysis.
This page is for general information only and does not constitute legal, tax, investment or regulatory advice. Commodity trading and trade finance involve price, credit, operational, legal and country risk. Financely is an advisory and arranging firm, not a lender, bank or broker-dealer. Any facility referenced is provided by third party lenders under their own licences, approvals and documentation, and is subject to underwriting, due diligence, KYC, AML and sanctions screening, credit approval, documentation and conditions precedent. No outcome, facility amount or timeline is guaranteed.
Before you submit
Your financing request goes straight to the principal. You receive a written diagnosis, the proposed structure and a one-off retainer before any work starts.
Recent mandates include a USD 150m revolving credit facility and a USD 12m acquisition closed in 21 days. We are an advisory and arranging firm, not a lender, and you close directly with the lender.
Financely is an advisory and arranging firm, not a lender or broker-dealer. All financing is subject to KYC, AML, due diligence and lender credit approval. No outcome or timeline is guaranteed.