- Who it's for
- UK Ltd companies, PLCs and LLPs importing or exporting goods
- Typical amounts
- £10,000 up to £1,000,000, linked to the trade deal
- Typical terms
- 1 to 6 months per transaction, sometimes revolving
- Minimum turnover
- £100,000 a year to use Lending Box
- Security
- Usually secured against the goods or receivables and a personal guarantee
Indicative only. Subject to lender assessment and approval.
Who it's for
- Importers who need to pay an overseas supplier before goods are shipped or received.
- Exporters offering payment terms to overseas buyers who need funding to cover the gap until payment arrives.
- Businesses with a confirmed purchase order or sales contract that needs funding to fulfil.
- Companies growing their international trading activity faster than their own cash reserves allow.
How it works
- 1You tell us about the trade deal — what's being bought or sold, the supplier or buyer, the amounts and timing.
- 2We match you to lenders offering the right type of trade finance for your situation, whether that's funding a purchase, a letter of credit, or support against export receivables.
- 3If an offer is suitable, funds are typically used to pay the supplier directly, or advanced against confirmed orders or invoices.
- 4The facility is repaid once goods are sold and invoiced, or once the overseas buyer pays, depending on the structure.
Main types of trade finance
"Trade finance" covers several related facilities, and the right one depends on which side of the deal needs support.
- Purchase or import finance — funds to pay an overseas supplier for goods, often repaid once the goods are sold on.
- Letters of credit — a bank or lender guarantees payment to the supplier on your behalf, subject to agreed conditions being met, reducing risk for both sides of the deal.
- Export finance — funding or insurance support for exporters offering payment terms to overseas buyers.
- Supply chain finance — facilities that sit between a business and its suppliers or buyers to smooth payment timing across a trading relationship.
What lenders look at
Because international deals carry extra risks around shipping, currency and counterparties, lenders look beyond the UK business's own figures.
- The track record and reliability of the overseas supplier or buyer.
- Documentation evidencing the deal — purchase orders, shipping terms, contracts.
- Your business's experience trading internationally and with this particular counterparty.
- How the goods or receivables involved can realistically be used as security.
Currency and timing considerations
Trade finance sits alongside, not instead of, sensible currency and timing planning.
- Currency movements between agreeing a price and paying it can change the real cost of a deal — some businesses use separate currency hedging products alongside trade finance.
- Shipping and customs delays can push out when goods, and therefore repayment, actually arrive — build some margin into any facility term.
- Confirming payment terms clearly with the overseas counterparty reduces disputes that can hold up a lender's support.
How a broker helps
Trade finance is one of the more specialist corners of commercial finance, with fewer lenders offering it and more variation in how facilities are structured. As a whole of market broker, we identify which lenders are realistic for your trade route, goods and counterparties, and help you assemble the documentation a lender will expect to see before funding a deal.
Our service is free to your business. We're paid a commission or finder's fee by the lender if finance completes; see our Broker Terms for details.
Eligibility
- A UK limited company, PLC or LLP (we can't help sole traders or partnerships).
- Annual turnover of at least £100,000.
- A confirmed purchase order, sales contract or trading relationship behind the transaction.
- A business bank account and trading history showing the company's dealings with suppliers or customers.
- Directors willing, in most cases, to give a personal guarantee.
Documents you'll need
- Purchase orders, sales contracts or pro forma invoices relating to the trade deal.
- Details of the supplier or buyer, including trading history with them.
- 3–6 months of business bank statements.
- Latest filed accounts, and management accounts if available.
- Photo ID and proof of address for directors.
Advantages
- Lets a business take on larger international orders than its own cash reserves would otherwise allow.
- Can be structured around a specific deal, which some lenders assess more readily than a general working capital request.
- Supports both import (funding purchases) and export (funding receivables) sides of international trade.
- Experienced lenders in this space understand international payment terms, documentary credit and shipping timelines.
Things to weigh up
- It's a specialist area, and not every lender offers trade finance, which can narrow the realistic options.
- Costs and structure depend heavily on the countries, currencies and suppliers involved, making like-for-like comparison harder.
- Facilities are usually secured against the goods or receivables and a personal guarantee, so a failed deal can still leave you liable.
- Currency movements between agreeing a deal and completing it can affect the real cost, separate from the finance itself.
Worked example (illustrative)
A UK electronics importer has agreed to buy £80,000 of stock from a supplier in East Asia, who requires payment before shipment. The importer has a confirmed order from a UK retailer worth £120,000 once the stock arrives.
A trade finance lender agrees to pay the overseas supplier directly, with the facility repaid once the importer invoices the UK retailer, over a term of around 3 months.
Using the invoice finance calculator below as an illustrative guide, an £80,000 facility over 3 months at an illustrative 2.5% a month works out at roughly £6,000 in finance cost. The real cost depends entirely on the lender's assessment and the deal's structure.
Invoice finance calculator
Cash today (up to)
£19,800
- Fee
- £360.00
- Balance when your customer pays
- -£160.00
- What you receive overall
- £19,640.00
Up to 99% of each eligible invoice (£100–£100,000 per invoice), one fee of 0.06% per day (minimum 10 days or £18), no set-up or ongoing fees. Facilities up to £700,000. For limited companies invoicing other businesses or the public sector.
Illustrative only. Indicative only. Subject to lender assessment and approval.
Frequently asked questions
Related guides
Related funding
Lending Box helps UK businesses access business finance, working directly with businesses and their trusted advisers. We are a credit broker and do not provide loans ourselves. All finance and quotes are subject to status and income. Applicants must be aged 18 or over, and terms and conditions apply. Guarantees and indemnities may be required. Lending Box can introduce applicants to a number of providers based on each applicant's circumstances and creditworthiness. We can also make insurance introductions. Lending Box will receive a commission or finder's fee for arranging such finance and insurance introductions. Broker Terms