Red Clause Letter of Credit Financing
A red clause LC lets the exporter draw an advance before shipment. We structure it so the buyer's bank can approve it and the advance is controlled.
Start Client IntakeWho This Is For
Exporters and producers of agricultural goods, metals and other commodities who need cash before shipment to buy, process or transport goods, and buyers who are willing to fund that advance through their letter of credit.
What FG Capital Advisors Does
- Size the advance against the production and shipment cycle.
- Draft the red clause or green clause terms, release conditions and documents required for each draw.
- Set controls such as warehouse receipts, inspection and repayment from shipment proceeds.
- Prepare the file and approach suitable issuing banks.
- Compare alternatives such as pre-export finance when the buyer will not fund the advance.
How The Process Works
Submit the trade through our intake. We review it, and where it fits our scope we issue a written proposal. Once engaged, we structure terms with you and your buyer, run the bank approach and coordinate issuance. Our red clause LC guide explains how advances work. For lender-funded options, see pre-export finance structuring.
What To Send In The Intake
The sales contract, buyer and buyer's bank, LC amount, advance requested and its use, the production and shipment schedule, storage or warehouse arrangements and your recent export history.
Related Services and Guides
Start Your Client Intake
Send the details through our client intake. We review every submission and reply in writing with next steps. LC, guarantee and facility approval, pricing and issuance remain subject to bank or lender review, KYC, AML, sanctions screening, credit approval and documentation. No outcome is guaranteed.
Start Client IntakeFrequently Asked Questions
What is a red clause letter of credit?
It is an LC with a clause allowing the beneficiary to draw an advance before shipment. The buyer carries the risk of the advance.
What is the difference between a red clause and a green clause LC?
A green clause usually requires the goods to be stored under the bank's control, for example with a warehouse receipt, before the advance is released.
What if my buyer will not agree to a red clause?
Pre-export finance from a lender against your offtake contract may be an option, subject to lender review.
