Borrowing Base and Revolving Credit Facility for Physical Commodity Traders

Who this page is for. Physical commodity traders that need a syndicated or bilateral revolver tied to eligible receivables and inventory with hard controls over title and cash. Not legal or tax advice. All facilities subject to KYC, sanctions, collateral, and documentation.

Borrowing Base and Revolving Credit Facility for Physical Commodity Traders

You want a line that grows with the book and stays open when markets jump. That requires clean eligibility rules, clear reserves, real collateral control, and reporting that lenders trust. If depots, invoices, or titles are messy, credit committees stall. We fix the structure, build the pack, and place the facility.

Metals • Energy • Agri and softs Eligible AR and inventory Bilateral or club Account control and CMAs

What we deliver end to end

Workstream Our role Outputs
Structure Design base rules that fit your flows Term sheet, borrowing base model, reserves map, eligibility schedule
Capital Target and syndicate lenders and funds Bilateral or club RCF, pricing grid, tenor, accordion options
Collateral Put control in writing and at depot CMAs, warehouse receipts, tank warrants, endorsed BLs, liens and filings
Cash control Make collections predictable Deposit Account Control Agreements, escrow waterfall, buyer notices
Reporting Build lender-ready data flows Daily positions, weekly base certs, monthly borrowing base certificate
Risk transfer Bind insurance and confirmations Cargo and stock cover, credit insurance, confirmations, lender loss payee
Docs and closing Paper that clears banks Facility agreement, security docs, LC annex, CP list, opinion checklist

How the borrowing base works

Component Typical range Notes
Eligible receivables advance 70% to 90% By buyer grade, insurance, and tenor
Eligible inventory advance 50% to 80% By product, location, and title control
Concentration limits 10% to 35% per buyer or product Higher with collateral and insurance
Reserves As set in the agreement Freight, duties and VAT, FX, aging, hedge MTM, title gaps
Ineligibles Zero advance Aged AR, related party offsets, sanctioned routes, disputed invoices

Availability equals receivables advance plus inventory advance minus reserves minus ineligibles. Keep data tight and availability stays predictable.

Eligibility rules that clear credit

Bucket Core tests Evidence
Receivables Buyer grade, invoice terms, aging, set off, dispute status SOA, insurance policy, buyer notices, confirmations
Inventory Title, storage, inspector control, location, product spec WRs or tank warrants, CMA, inspector reports, insurance
Trade docs Clean BLs, permits, Incoterms, sanctions routing BL copies, customs forms, AIS logs, sanctions screens

Reserves and reporting discipline

  • Reserves for freight, taxes, FX, hedges, quality, and timing gaps.
  • Daily position file by depot and in transit. Serial and lot control where relevant.
  • Weekly base certificate with movements and adjustments. Monthly BBC with auditor-style support.
  • Data sources from ERP, inspectors, and banks. Single spreadsheet with change log for lenders.

Security package lenders sign off

  • Assignment of proceeds and receivables with buyer notice.
  • Pledge or title over inventory via WRs, tank warrants, endorsed BLs.
  • Collateral Management Agreement with a top surveyor controlling in and out flows.
  • Deposit Account Control Agreements over collections and escrow sweep.
  • Insurance for cargo and stock, lenders as loss payee. Credit insurance where used.
  • Step in rights, events of default, cure timelines, and replacement rules.

How we run a mandate

Phase Weeks Deliverables
Scoping 1 to 2 Trade map, base rules, lender list, CP checklist
Indicative terms 1 to 3 Capacity, pricing bands, covenants, collateral plan
Diligence 2 to 4 KYC, depot approvals, inspector scopes, insurance quotes
Docs and CPs 3 to 6 Facility agreement, security docs, CMAs, DACAs, LC annex
Go live Per cycle Draws, shipments, sweep and reporting

Lender pack checklist

  • Audited financials and latest management accounts.
  • Trade flows with Incoterms, routes, and counterparty grades.
  • Contracts, POs, SPAs, LC text where applicable.
  • Borrowing base model with eligibility and concentration rules.
  • CMA draft, depot list, sample WR or tank warrant, inspector scope.
  • Insurance quotes for cargo and stock. Credit insurance if used.
  • KYC and sanctions screen. ESG red flags and mitigants.
  • Board approvals, governance chart, and opinion plan.

FAQs

How big can the line be

We size to eligible collateral and run an accordion for peak seasons. Clubs give more headroom than a single bank.

How is pricing set

Base rate plus margin on drawn amounts. Grid steps by leverage, collateral quality, and reporting KPIs.

How often do we report

Daily positions, weekly base certs, monthly BBC. Lenders can ask for more during stress. We set the cadence up front.

Can we include in transit or bonded stock

Yes if title and control are clear. WRs, tank warrants, CMAs, and inspector logs are non negotiable.

Ready to stand up a borrowing base revolver that funds on time and stays open

Request a Proposal Book a Consultation

Disclaimers

  • We advise and arrange financing. We are not providing legal or tax advice.
  • Terms vary by commodity, counterparty, route, collateral, and market conditions.
  • All transactions are subject to diligence, approvals, insurance, and final documentation.