Notice. FG Capital Advisors is a trade and capital advisory firm with a focus on carbon, commodities, and structured credit. The firm provides financial modelling, analytical support, and sponsor side advice around commodity finance, trade facilities, and related capital structures. 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, derivative, 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.
Trade Finance Guide
Trade finance is not just a product set. It is a credit logic that connects goods, documents, cash flows, and controls. When that logic is tight, lenders can fund serious volume without leaning only on unsecured balance sheet risk.
This guide explains the core trade finance structures used by importers, exporters, commodity traders, and sponsor-backed platforms. It focuses on what credit committees care about, what documentation really matters, and how to build facilities that scale with real trade flows.
Request Trade Finance ReviewWhat This Trade Finance Guide Covers
Trade finance sits at the intersection of working capital, logistics, counterparty risk, and operational control. The most bankable structures are those that show who pays, when they pay, what collateral exists, and who controls it.
- How lenders assess trade flows versus general corporate credit.
- The main facility types and when each is appropriate.
- The role of documentary standards, Incoterms, and performance controls.
- Borrowing base concepts and eligibility logic for inventory and receivables.
- Common failure points that delay or kill approvals.
The objective is to help you position your trade cycle in a way that is readable to banks and private credit providers.
Core Trade Finance Instruments
Trade finance instruments often act as building blocks inside broader facilities. Each tool carries a different risk allocation and documentary threshold.
- Documentary letters of credit that manage payment risk through compliant documents and defined presentation rules.
- Standby letters of credit and demand guarantees used for performance support, credit enhancement, and structured risk sharing.
- Trade loans that fund discrete purchase and sale cycles with repayment tied to shipments and receivables.
- Receivables purchase and discounting anchored on approved buyers, clean invoice trails, and reliable collections.
- Inventory and warehouse frameworks where stock forms the repayment cushion under clear control and inspection regimes.
The right instrument is a function of product risk, corridor risk, counterparty quality, and how much control can be proven on paper and in operations.
Facility Structures By Use Case
Many businesses confuse trade finance with a single line. In practice, scalable funding usually blends more than one structure.
- Importers often rely on purchase-linked lines, letters of credit-backed funding, and short tenor trade loans that convert into receivables funding after sale.
- Exporters may access pre-export finance, structured advances against confirmed orders, and receivables-backed lines for approved buyers.
- Commodity traders typically require borrowing base revolvers tied to inventory and receivables, with independent inspection and strict release mechanics.
- Producers and processors can be supported through offtake-linked working capital and prepayment structures where contracts and production discipline align.
- Sponsor-backed platforms often need post-acquisition upgrades to working capital frameworks that prove control, reporting, and repeatability.
The common thread is clarity of the trade cycle and documentary discipline that allows lenders to underwrite collateral with confidence.
Borrowing Base Logic In Plain Terms
A borrowing base is a formula-led framework that translates eligible collateral into available funding. It is one of the most scalable structures in trade and commodity finance when executed with clean reporting.
- The base commonly includes eligible inventory and eligible receivables, sometimes linked to specific contracts or storage locations.
- Advance rates vary by product, volatility, storage control, buyer quality, and jurisdiction.
- Eligibility filters address concentration, aging, disputes, title gaps, and documentary weaknesses.
- Reserves protect the lender against price moves, operational slippage, and counterparty shocks.
A borrowing base is only as strong as the inspection, title, and reporting rhythm behind it.
Documentation And Control Points Lenders Expect
Lenders fund what they can verify and control. Weak documentation is the fastest route to smaller limits, higher pricing, or flat rejection.
- Purchase and sales contracts with consistent terms, delivery obligations, and payment mechanics.
- Clear Incoterms alignment that shows where risk and title transfer.
- Storage and warehouse agreements confirming access rights, release protocols, and inspection standards.
- Independent collateral management or inspection where product risk or jurisdiction risk is elevated.
- Reliable trade data showing volumes, margins, seasonality, and counterparty performance.
Even strong businesses can underperform in credit committee if their file does not show disciplined, repeatable control.
Common Reasons Trade Finance Mandates Stall
Most delays are not about a lack of demand. They are about uncertainty. Trade finance is a trust business with formal rules.
- Inconsistent trade flow records or unclear margin and volume drivers.
- Overreliance on new counterparties without performance history.
- Storage arrangements that do not support lender control or clean title.
- Documentation gaps across contracts, invoices, transport docs, and insurance.
- Weak internal reporting cadence that makes monitoring expensive for lenders.
Fixing these issues early can shift a mandate from informal interest to structured terms.
How FG Capital Advisors Supports Trade Finance Outcomes
Our role is to build a lender-ready narrative and structure around real trade mechanics. We focus on turning operational reality into a credit package that is coherent, documented, and scalable.
- Trade flow mapping by product, route, counterparty, and Incoterm.
- Working capital and cash conversion modelling with stress views.
- Facility design covering borrowing base logic, eligibility criteria, reporting, and covenant philosophy.
- Security and control framework recommendations aligned with storage and logistics reality.
- Information pack preparation for bank and private credit conversations, working through regulated partners where execution is involved.
You get a direct assessment of what is realistic, what is likely to be challenged, and what documentation upgrades will materially increase lender comfort.
If you want trade finance that scales, your file must show disciplined flows, clean documentation, and clear control. That is what separates short-term transactional lines from facilities that grow with your volumes.
Share your products, corridors, top counterparties, storage set-up, and current limits. We will outline the most suitable trade finance structures and the steps needed to present a term sheet-ready package.
Submit Trade Finance EnquiryDisclosure. 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 commodity finance facility, trade line, guarantee, derivative, or investment product referenced on this page is carried out by regulated entities under their own licences, terms, and documentation. Commodity finance and related structures involve credit, performance, operational, legal, market, and policy risk. Nothing on this page is a recommendation or a solicitation to enter into any transaction or to buy or sell any financial product. 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.
