Advertisement

Trade Loans

  • Stephen A. Jones
Chapter

Abstract

A structured facility is defined by the level of control that the financier has over the flow of goods and money. The use of trade loans as part of a fully or partially structured lending solution to fund the gap between supplier payment and the receipt of identifiable trade receivable proceeds is described. The nature of drawdown documentation is discussed. Structuring trade loans to manage risk exposure, stock call-off, and accommodate multiple sales is positioned and their benefit of highlighting slippage in the transaction where their duration is aligned to the client’s trade cycle. The risks of combining their use with an overdraft and the dangers of allowing the borrower use of the sale proceeds prior to repayment of the loan are highlighted.

Keywords

Clean trade loan Documentary trade loan Managing risk exposure Partially structured facilities Repayment Structuring trade loans 

Copyright information

© The Author(s) 2018

Authors and Affiliations

  • Stephen A. Jones
    • 1
  1. 1.AXS Trade Finance Ltd.Solihull, West MidlandsUK

Personalised recommendations