Trade Finance Cost Calculator

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Trade Finance Cost Calculator

Estimate the cost of a letter of credit, LC discounting, pre-export finance, receivables finance or inventory facility. Adjust the assumptions to reflect pricing from your bank, lender or trade finance provider.

Trade finance rarely has one single cost. Pricing can include a benchmark rate, lender spread, letter of credit commission, confirmation fee, arrangement fee, transaction charges and collateral requirements. This calculator separates those components so you can estimate the economics of a transaction more accurately.

Transaction assumptions

Select a structure and then change any assumption to match your transaction.

Presets are indicative starting assumptions. They are not lender quotations.
Number of calendar days.
Interest and lender pricing
Use SOFR, EURIBOR, SONIA or another relevant benchmark.
Credit spread charged above the benchmark.
Bank and transaction fees
Annual commission charged on the LC face amount.
Enter zero where no confirming bank is required.
One-off percentage charged against the transaction or facility.
SWIFT, documentation, processing, legal or other known costs.
Cash margin / collateral
Cash pledged or blocked against the facility.
Optional economic cost assigned to capital tied up as cash margin.

Estimated cost

Based on the assumptions entered in the calculator.

Total economic cost $0 Over the selected transaction tenor
Transaction cost 0.00%
Annualized equivalent 0.00%
Funded interest rate 0.00%
Cost per 1 million $0

Cost breakdown

Benchmark interest $0
Lender margin $0
LC issuance commission $0
Confirmation commission $0
Arrangement / facility fee $0
Fixed fees $0
Cash-margin opportunity cost $0
Cash margin posted $0

Cash margin is shown separately. The collateral amount itself is not counted as a transaction cost. Only the selected opportunity cost of tying up that capital is included in the total economic cost.

Basic assumptions

  • Interest, LC issuance fees and confirmation fees are calculated pro rata over the selected tenor using either a 360-day or 365-day convention.
  • The funded interest rate is the benchmark rate plus the lender's margin. Both assumptions can be edited independently.
  • The default benchmark rate is 3.65% for USD transactions. Users should replace this with the benchmark applicable when they are evaluating a transaction.
  • Product presets are starting assumptions only. They are not bank quotations and should not be interpreted as current executable pricing.
  • Actual pricing can vary materially according to borrower credit, issuing bank, confirming bank, jurisdiction, transaction size, commodity, collateral, tenor and structure.
  • Arrangement and facility fees are treated as one-off percentages rather than annualized charges.
  • Cash margin is treated as collateral rather than a fee. The calculator separately estimates the economic cost of having the capital tied up.
  • Taxes, withholding, FX hedging, insurance, inspections, correspondent-bank charges, discrepancy fees and other costs are excluded unless entered under fixed fees.
  • The annualized equivalent is a simple annualization of the calculated transaction cost. It is not a regulatory APR or a binding financing quote.
Benchmark reference: 90-Day Average SOFR.

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Financely can review the transaction structure and approach relevant banks, trade finance lenders, credit funds and other institutional providers.

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This calculator is provided for informational and budgeting purposes only. It does not constitute a financing offer, commitment, investment recommendation, credit decision or guarantee of pricing or availability. Actual transaction terms are determined by the relevant financing provider following due diligence, credit approval and documentation.

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