Non-Bank Trade Finance Lending | FG Capital Advisors

Notice. FG Capital Advisors is a trade and capital advisory firm focused on commodities, structured trade finance, and private credit. The firm provides financial modelling, due diligence support, structuring, and sponsor side advice around borrowing base facilities, pre export and prepayment structures, inventory and receivables finance, and LC or guarantee backed working capital. FG Capital Advisors is not a bank, lender, credit insurer, broker dealer, or retail investment adviser and does not issue loans, guarantees, or insurance products. Any facility, guarantee, LC, or investment is provided by regulated counterparties under their own licences and documentation. All potential transactions are subject to KYC and AML checks, sanctions screening, credit and investment committee decisions, independent legal and tax advice on the client side, and formal agreements with those regulated entities.

Non-Bank Trade Finance Lending

Non bank trade finance capital is often described as a flexible alternative to banks. In practice, the better funds and private credit houses run credit files that look very close to specialist banks, just with different return targets, constraints, and portfolio priorities.

For sponsors with real flows and balance sheets, the opportunity is clear. Non bank lenders will look at exposures, sectors, and jurisdictions that many banks avoid, but they expect tight structures, credible collateral, and English law paper that can stand up when something breaks.

How Non Bank Trade Lenders View Risk

The starting point is not a marketing slide about “funding the trade gap”. It is a cash flow and loss profile inside a closed end or evergreen credit vehicle that reports to investment committees and external investors.

  • Self liquidating exposure. Facilities are expected to repay from defined cash flows such as receivables, export proceeds, or LC reimbursement. If the path from shipment to cash is vague, appetite falls quickly.
  • Short to medium tenor. Liquidity is tied to fund tenor and investor base. Many funds anchor around 180–365 day effective exposure, even if headline facility tenors are longer.
  • Asset backed risk, not unsecured corporate bets. Interest is in receivables with proven performance, inventory with clear title and control, and export contracts with delivery history. Unsecured working capital lines for thinly capitalised entities sit at the back of the queue.
  • Country and counterparty grids. Investment committees approve grids by country, sector, counterparty type, and instrument. A deal can fail not because of sponsor quality but because it sits in the wrong box.
  • Exit in stress. Non bank lenders think about enforcement and secondary exit early. If goods, receivables, or security cannot realistically be monetised under English law in a stress case, headline margins do not rescue the file.

Sponsors that present their business in these terms tend to move from long conversations to term sheets, while those that lead with story and ignore risk buckets stay stuck in “interesting, but”.

Borrowing Bases, Prepayments, And Trade Credit

Borrowing base facilities sit at the core of non bank trade lending. They give portfolio managers a formulaic way to manage exposure, while giving sponsors predictable headroom against working capital.

  • Eligibility grids. Receivables and inventory are split into buckets by obligor quality, geography, tenor, and product. Some assets carry zero availability from day one, even if they appear on the balance sheet.
  • Advance rates and reserves. Haircuts are set at a level that keeps expected loss and worst case scenarios within the fund’s mandate. Country risk, FX exposure, slow moving stock, tax liens, and disputed receivables sit in reserve formulas rather than in narrative sections.
  • Interaction with trade credit. Supplier terms, buyer terms, and any credit insurance shape the borrowing base. A sponsor that stretches suppliers informally while asking for long dated receivables finance sends the wrong signal to credit teams.
  • Pre export and prepayment structures. Where offtake contracts and export proceeds drive the deal, borrowing base logic moves into pre export and prepayment facilities secured on receivables and export accounts rather than warehouse stock.

The practical insight is that non bank lenders pay as much attention to the stability of the trade credit chain as they do to the sponsor’s headline EBITDA.

Collateral Management Agreements And Control Of Goods

For inventory heavy structures, control sits at the centre of credit discussions. Collateral Management Agreements are not cosmetic. They are a response to long experience with missing or impaired stock.

  • Third party gatekeepers. A credible collateral manager controls access to stock, issues release notes, and reconciles physical counts to lender records. In practice, the manager’s reporting can be as important as the borrower’s.
  • Contract clarity. Well drafted CMAs set out where liability sits for loss, quality disputes, and timing issues. Loose wording around responsibility for shortages or contamination will trigger pushback from credit and legal teams.
  • Operational friction vs control. Sponsors often resist CMAs because they introduce procedure at warehouse doors. The funds that stay in the market accept some friction in exchange for control that will stand up when they need it.
  • Local reality. In frontier or emerging markets, the quality of collateral managers varies. Non bank lenders that remain active in those markets spend time running due diligence on warehouse operators and inspectors, not just borrowers.

Sponsors that embrace CMAs early and help define workable processes usually see faster approvals and better advance rates than those that fight every element of control.

English Common Law, Security Packages, And Documentation

Most cross border non bank trade facilities rest on English common law for a reason. Credit and legal teams want tested precedents on receivables, charges, and enforcement, not novelty.

  • LMA style documentation. Facility agreements often follow Loan Market Association structures, adapted to trade finance. That gives committees a familiar framework for covenants, events of default, and information undertakings.
  • Security over cash and claims. Standard packages include fixed and floating charges, assignments of receivables and insurances, share pledges, and account charges over collection accounts. Cosmetic security that cannot be enforced under English law brings little comfort.
  • Interplay with local law. Local security and registrations still matter, but the core enforcement roadmap is drafted against English law. Deals that rely only on weak local mechanics struggle to pass larger funds’ internal tests.
  • Consistency with CMAs and commercial contracts. Credit lawyers look for alignment between CMAs, warehouse contracts, sale contracts, and the facility agreement. Gaps between these documents are often where recoveries fail.

Sponsors that accept English law and invest in coherent documentation frameworks signal that they are ready for long term capital rather than one off transactions.

What Non Bank Lenders Expect From Sponsors

Lenders do not expect perfection, but they do look for a basic level of discipline and disclosure that separates bankable corporates from opportunistic users.

  • Transparent ownership and governance. Clear cap tables, board oversight, and decision making authority that can be verified. Complex offshore chains with no obvious rationale draw scrutiny.
  • Financial statements that match reality. Audited accounts where size and jurisdiction warrant them, backed by management accounts that reconcile and explain variance, not just headline growth.
  • Data that can feed a borrowing base. Clean AR and inventory reporting, consistent SKUs, and reconciled stock positions. If internal systems cannot produce credible reports, lenders assume control risk.
  • Acceptance of security and covenants. Reasoned discussion on collateral, covenants, and reporting is welcome. Blanket refusal to grant charges or accept information undertakings points to future conflict.
  • Alignment on use of proceeds. Funds want to see that working capital facilities actually support trade and operations rather than being diverted to unrelated bets, shareholder extractions, or speculative activity.

In short, non bank trade lenders are prepared to price risk. They are less prepared to sponsor weak behaviour or structural opacity.

Where Sponsors Misread Non Bank Appetite

Many conversations fail not because of sector or country, but because sponsors misjudge what non bank lenders are solving for.

  • Treating funds as a back door when banks say no, without changing structure, alignment, or disclosure.
  • Presenting “trade finance” requests that are really unsecured corporate loans in disguise.
  • Assuming that headline margin alone compensates for weak collateral or unenforceable security.
  • Underestimating the level of operational control and third party involvement that serious funds will require through CMAs, blocked accounts, and reporting.
  • Forgetting that fund managers themselves report to credit committees, LPs, and audit teams that will challenge outliers.

Sponsors who treat non bank lenders as disciplined credit providers from the outset tend to secure deeper, more repeatable relationships than those who approach them as last resort liquidity.

Non bank trade finance lending is not a softer version of bank credit. It is a different pool of capital with its own constraints, approval channels, and appetite for structured risk.

Sponsors that are ready to present trade flows, security, and documentation at that level can access a broader set of options than those who treat private credit as an afterthought. FG Capital Advisors works with borrowers that want to frame their case in the same language non bank credit teams use internally.

Discuss Non Bank Trade Finance

Disclosure. FG Capital Advisors provides financial modelling, analytical, and advisory services. The firm does not originate, offer, or sell securities, loans, deposits, guarantees, or insurance products and does not accept client money. Any trade finance facility, SBLC, bank guarantee, documentary LC, UPAS LC, derivative, or investment product referenced on this page is carried out by regulated entities under their own licences, terms, and documentation. Commentary on non bank trade finance lending reflects general market practice and cannot replace transaction specific legal, tax, or credit advice. Any engagement with FG Capital Advisors is subject to internal approval, conflict checks, KYC and AML checks and sanctions screening where required, and the terms of a formal engagement letter.