What is Structured Commodity Finance?
Structured Commodity Finance is
a specialized form of trade finance designed to support commodity traders, producers, and importers/exporters who need capital to purchase, move, and sell raw materials or refined products. Unlike traditional bank loans, this financing is backed by the commodity itself, future receivables, or transaction-specific guarantees.
In simple terms?
It’s the funding that gets deals done. Whether you’re buying crude oil, metals, or agricultural goods, you need capital upfront. But banks don’t move at the speed of trade, and suppliers won’t wait. Structured financing fills that gap, ensuring you have the liquidity to
secure shipments, meet supplier terms, and move goods without tying up your own balance sheet.
How It Works
Lenders provide capital
secured by trade flows, inventory, or receivables. The structure varies depending on the deal, but common financing mechanisms include:
- Prepayment Finance – Upfront capital to purchase commodities before delivery.
- Borrowing Base Facilities – Credit lines backed by inventory or receivables.
- Letters of Credit (LCs) & Standby LCs – Guaranteeing payment to suppliers so you can secure goods.
The goal?
Keep your capital moving, reduce your risk, and ensure trades close on time.