Pre-Shipment Financing
In today’s competitive global trade environment, businesses require flexible financing solutions to optimize their cash flow and ensure smooth operations. Commodity-Based Lending is a specialized form of pre-shipment financing that enables companies to convert their inventory into immediate liquidity while maintaining operational stability.
How Commodity-Based Lending Works
Commodity-Based Lending is structured as a secured financing solution, where the company’s inventory or raw materials serve as collateral for the loan. This ensures businesses can access working capital without needing to rely on traditional credit lines or long approval processes.
• The borrower pledges commodities (e.g., raw materials, agricultural products, metals, or other inventory) as security.
• A financial institution or lender advances capital, typically covering 70-80% of the inventory’s total market value.
• The lender may hold the commodities in a warehouse, via a third-party collateral manager, ensuring inventory control and risk mitigation.
• Once the commodities are sold or exported, the borrower repays the loan from the proceeds, maintaining a revolving line of credit.
Key Features of Commodity-Based Lending
- Asset-Backed Financing – Unlike traditional loans, this financing is based on tangible assets (inventory) rather than financial history or creditworthiness.
- Flexible Loan Amounts – The financing amount is directly linked to inventory value, allowing companies to scale funding in line with their trade cycle.
- Short- to Medium-Term Loan Structures – Typical financing cycles range from 180 to 360 days, ensuring companies have sufficient time to manage trade flows and repay loans from revenue.
- Secure Risk Management – Lenders mitigate risk by controlling pledged commodities through warehouse receipts or third-party custody arrangements.
- Optimized Supplier Payments – Companies can prepay suppliers, negotiate better terms, and secure discounts, strengthening supply chain relationships.
- Continuous Cash Flow – Businesses can reinvest working capital into new purchases, production, or operational expansion without disruptions.
Who Benefits from Commodity-Based Lending?
This financing solution is ideal for businesses involved in commodity trading, manufacturing, and global supply chains, including:
🔹 Agricultural Producers & Exporters – Coffee, grains, sugar, cocoa, cotton, and other soft commodities.
🔹 Mining & Metals Companies – Gold, silver, copper, aluminum, and industrial metals.
🔹 Oil & Energy Sector – Crude oil, natural gas, and refined petroleum products.
🔹 Manufacturers & Distributors – Companies with large raw material inventories that need consistent cash flow.
Whether you’re exporting commodities, managing seasonal demand, or scaling your operations, commodity-based financing unlocks new growth opportunities without increasing debt burdens.
Why Choose PL Trade Finance?
With over 40 years of expertise in Trade and Commodity Finance, PL Trade Finance structures tailored financing solutions to meet the needs of businesses across North America, Latin America, and Asia.
🔹 Competitive Financing Terms – Flexible loan-to-value (LTV) ratios to maximize funding potential.
🔹 Fast & Efficient Approval Process – Rapid access to capital to avoid supply chain delays.
🔹 Global Market Expertise – Extensive network of financial partners and trade professionals.
🔹 Customized Risk Management – Secure structures to protect inventory and ensure compliance.
Transform your inventory into working capital today! Contact us to explore tailored financing solutions that drive your business forward.