Structured trade finance facilities can provide working capital against identifiable commercial transactions rather than relying solely on the borrower’s balance sheet. The financing structure is typically built around the underlying purchase contract, sale contract, documentary credit, receivable, inventory position and expected repayment waterfall.
For commodity traders, manufacturers, exporters and importers, facilities can be structured at different points in the transaction cycle. Pre-shipment finance provides liquidity before goods are delivered to the buyer, while post-shipment finance bridges the period between shipment or acceptance and final payment.
The indicative term sheet below illustrates how a structured trade finance facility may be structured for qualifying transactions.
Structured Trade Finance
Indicative Pre-Shipment and Post-Shipment Financing Parameters
PRE-SHIPMENT FINANCE
Facility
Pre-Shipment Trade Finance / Purchase Order Finance / Transactional Working Capital
Eligible Borrowers
Commodity traders, exporters, manufacturers, distributors and other qualifying commercial entities
Indicative Facility Size
$1,000,000 – $100,000,000+
Purpose
Supplier payments, procurement, production, processing, logistics, freight, insurance and other transaction-specific costs incurred before shipment
Advance Rate
Typically 60%–90% of eligible transaction costs or purchase value, subject to structure and risk
Typical Tenor
30–180 days, with longer transaction cycles considered selectively
Primary Repayment Source
Proceeds generated from shipment and payment under the underlying sale contract, receivable, LC or other approved payment undertaking
Typical Documentation
Executed purchase contract, sale contract or purchase order, supplier documentation, buyer information, transaction economics, logistics plan and corporate/KYC documentation
Security
Assignment of transaction proceeds, receivables, inventory, goods, contracts, collection accounts and other transaction assets as applicable
Transaction Controls
Controlled disbursement, direct supplier payment, collateral management, inspection, warehouse controls and controlled collection accounts may apply
Pricing
Transaction-specific. Pricing reflects borrower strength, commodity risk, buyer quality, advance rate, tenor, collateral, jurisdiction and transaction controls
POST-SHIPMENT FINANCE
Facility
Post-Shipment Finance / Receivables Finance / Export Finance / LC Discounting
Funding Basis
Eligible trade receivables, accepted invoices, documentary credits, deferred-payment obligations or other approved payment claims
Advance Rate
Typically 70%–95% of eligible receivable value
Typical Tenor
30–180 days, depending on payment terms and obligor quality
Eligible Payment Structures
Open-account receivables, documentary collections, sight or usance LCs, deferred-payment LCs, bank payment undertakings and other acceptable payment structures
Repayment
Directly from the buyer, issuing bank, confirming bank or controlled collection account at maturity
Recourse
Full recourse, limited recourse or non-recourse structures may be considered depending on the obligor, instrument and transaction
Typical Documentation
Commercial invoice, transport documents, inspection certificates, proof of delivery or shipment, underlying contract, payment instrument and corporate/KYC documentation
Credit Enhancement
Trade credit insurance, LC confirmation, guarantees, collateral or other risk mitigation may improve financing capacity and pricing
Currencies
USD, EUR, GBP and other major currencies subject to lender appetite
Geography
Cross-border and domestic transactions in eligible jurisdictions
Key Underwriting Factors
Buyer creditworthiness, transaction margin, supplier performance, commodity liquidity, documentary controls, jurisdiction, sanctions exposure, logistics and repayment certainty
Structure
Single-transaction, revolving, borrowing-base or programmatic facilities may be considered depending on recurring trade volumes
Structuring the Facility
The strongest structured trade finance transactions have a clearly identifiable commercial cycle and repayment source. A lender will typically assess the borrower alongside the supplier, buyer, commodity or goods, contractual documentation, logistics chain and payment mechanism.
Pre-shipment transactions generally require tighter control because financing is advanced before the receivable has been created. Post-shipment financing can often support higher advance rates when goods have already been shipped and payment is supported by a strong buyer, confirmed documentary credit or insured receivable.
Financely structures and places trade finance transactions across pre-shipment finance, post-shipment finance, receivables finance, documentary credit facilities, supply chain finance and transaction-specific working capital. Applicants should be prepared to provide the underlying purchase and sale contracts, transaction economics, corporate documentation and evidence supporting the proposed repayment source.
Disclaimer
The terms above are illustrative and provided for informational purposes only. They do not constitute a commitment to lend, an offer of credit or a guarantee of financing. Facility size, advance rates, pricing, tenor, collateral requirements and other terms are determined by participating financial institutions following underwriting, KYC, AML, sanctions screening and transaction due diligence.
Financely acts as an independent capital adviser and arranger. Financely does not accept client deposits or collateral and does not represent that any transaction will receive financing. All mandates are undertaken on a best-efforts basis and remain subject to lender and investor approval.
