Professional Services. Page prepared September 2025. FG Capital Advisors acts as arranger and advisor via regulated partners.
How to Secure Private Capital for Physical Commodity Transactions
A practical method to raise debt capital for metals, energy, and agri flows. Use letters of credit under UCP 600, confirmation and discounting, borrowing base facilities, and inventory repo with lender-grade controls.
1) Define The Trade
Lock the commercial terms first. Identify product specs, Incoterms, shipment windows, counterparties, currency, and hedging policy. Map title transfer and risk through the route.
2) Select Capital Channel
Choose the structure that matches tenor and risk. Options include LC issuance and confirmation, pre-export finance, borrowing base revolving credit, inventory repo with title transfer, or receivables purchase.
3) Build Controls
Set assignment of proceeds, escrow, CMA at port or warehouse, inspection windows, and insured cargo. Align documentation to avoid refusals and pricing premiums.
4) Evidence Cash Flows
Provide offtake contracts, historical performance, and bank statements. Present a clear collections waterfall and dominion of funds where required.
5) Prepare The Pack
Buyer and seller KYC, corporate docs, audited or reviewed financials, AR aging, inventory reports, purchase orders, draft LC text, insurance certificates, and collateral schedules.
6) Run Approvals
Engage issuing, advising, and confirming banks for LCs. For RCFs and repos, complete field exams, appraisals, and legal opinions. Close with CPs tied to controls.
| Lender Criteria For Commodity Trade Finance | ||
|---|---|---|
| Criterion | What To Evidence | Why It Drives Terms |
| Counterparty Quality | Buyer credit profile, performance history, sanctions and AML screens | Improves confirmation appetite and reduces margins |
| Collateral Liquidity | Marketability, grade specs, storage terms, price visibility | Supports advance rates in borrowing base and repo |
| Documentation Quality | UCP 600-compliant LC text, clean title chain, inspection windows | Reduces refusal risk and unlocks discounting |
| Controls | Assignment of proceeds, escrow, CMA, warehouse receipts | Protects availability and limits loss given default |
| FX & Price Risk | Hedge policy, margining, risk limits, ISDA where relevant | Stabilizes cash flows and covenant compliance |
| Reporting | Borrowing base certificates, AR aging, stock reports | Enables ongoing monitoring and faster upsize |
| Funding Instruments For Physical Trades | |||
|---|---|---|---|
| Instrument | Typical Use | Advance / Terms | Key Controls |
| Letter of Credit + Confirmation | Secure payment to exporter and reduce country or bank risk | Sight or usance under UCP 600 with discounting post-acceptance | Aligned LC text, insured cargo, assignment of proceeds |
| Borrowing Base Revolving Credit | Working capital against eligible AR and inventory | AR up to 80% eligible, inventory up to 50% eligible, covenants apply | Lockbox, field exams, appraisals, BBC reporting |
| Inventory Repo (Title Transfer) | Liquidity at port or warehouse with buy-back terms | Advance vs NOLV with daily price tests | CMA, warehouse receipts, insurance with lender as loss payee |
| Pre-Export Finance | Pre-shipment funding secured by offtake | Amortizes from export proceeds via controlled account | Export assignment, escrow, performance milestones |
| Borrowing Base Snapshot (Illustrative) | ||
|---|---|---|
| Collateral | Eligibility Rules | Advance Logic |
| Accounts Receivable | No affiliates, under 90 days, country caps, concentration limits | Advance = 80% × Eligible AR less reserves |
| Inventory | In-bond or CMA-controlled, no obsolete or slow-moving stock | Advance = 50% × Eligible Stock or % of NOLV |
| In-Transit Cargo | Insured, title aligned, negotiable B/L, reputable carrier | Advance by corridor and tenor with tighter haircuts |
Execution Timeline
Raise Private Debt For Your Next Shipment
Submit your trade file and pro-forma terms. We structure LC issuance and confirmation, arrange discounting, and set up borrowing base or repo facilities with the right controls.
Start Your Capital RequestDisclaimer. FG Capital Advisors provides advisory and arrangement services. Final pricing, capacity, and advance rates are set by lenders after diligence and credit approval. Documentation quality and control mechanics influence outcomes.
