Import Financing: Letters of Credit & Purchase Order Advances

FG Capital Advisors underwrites and issues documentary letters of credit (DLCs) and structures purchase order financing to bridge funding gaps for importers, secure supplier confidence and preserve working capital.

Working Capital Strains in Import Trade

Importers must fund production, shipping and customs costs often before goods generate revenue. Tight supplier terms and seasonal swings can create cash shortfalls that stall shipments or force costly prepayments.

Documentary Letters of Credit (DLC)

We assess credit profiles and transaction documents, then partner with prime banks to issue DLCs that guarantee payment upon presentation of compliant export documents.

  • Credit Review — Analyze financials, trade history and existing obligations.
  • Collateral Options — Structure cash margins, rated securities or third-party guarantees in place of full cash cover.
  • Document Alignment — Ensure sales contracts, invoices and shipping papers match LC terms exactly.
  • SWIFT Coordination — Prepare and send MT 700/705 instructions, confirm with beneficiary banks and handle amendments.

Purchase Order Financing

PO financing advances working capital based on confirmed purchase orders. Funds cover supplier invoices and production costs, repaid from LC proceeds or upon delivery.

  • Order Verification — Confirm PO validity and supplier acceptance.
  • Risk Underwriting — Set advance rates (up to 90%) based on order size, supplier credit and product liquidity.
  • Advance Disbursement — Pay suppliers or importers directly to finance manufacture and freight.
  • Repayment Cycle — Collect from LC drawdown or receivables upon receipt of goods, settle principal and fees.

Integrated Financing Solutions

We can blend PO advances with DLCs to smooth the cash cycle: a PO advance funds production, the DLC secures export payment, and LC proceeds repay the advance, closing the loop.

Risk Controls & Compliance

  • Supplier Due Diligence — Vet manufacturing capacity, delivery track record and compliance.
  • Document Checklists — Use standard templates to minimize mismatches and payment delays.
  • Currency Hedging — Lock in FX rates with forwards to protect margins.
  • Insurance Guidance — Recommend cargo, credit and political-risk covers for high-risk routes.

Benefits for Importers

  • Improved Liquidity — Access funds before sales occur.
  • Better Supplier Terms — Secure volume discounts with guaranteed payment.
  • Working Capital Relief — Reduce upfront cash outlays through collateral optimization.
  • Operational Continuity — Keep shipments on schedule, even in seasonal peaks.

Frequently Asked Questions

How quickly can a DLC be issued?
With complete documentation, issuance can occur in 3–5 business days.

What are typical PO advance rates?
Advances run from 70% to 90% of PO value, based on supplier credit and product type.

What fees apply?
DLC issuance and confirmation fees (20–50 bp), PO advance fees (1–3% of advance) and financing interest (benchmark + margin).

Can small orders be financed?
Starting at USD 50,000 with flexible scaling for larger volumes.

Disclaimers & Important Considerations

FG Capital Advisors provides advisory and arrangement services only. Transactions depend on bank underwriting, supplier agreements and regulatory approvals.

Clients should seek independent legal, tax and trade compliance advice before engaging in import financing.