Trade finance: fast flexible funding for your business

  • Buy stock before you get paid

  • Take on larger customer orders

  • Pay suppliers upfront for better terms

  • Free up working capital to grow

A person climbs a bar graph toward money and a box, with a globe in the background and a 4.8-star rating above.

What is trade finance?

Trade finance is a type of funding that helps businesses pay for goods or materials upfront, allowing them to fulfil customer orders even when cash flow is tight. If you’ve secured an order but don’t have the funds to pay your supplier, trade finance can provide the support you need.

With trade finance, a lender can pay your supplier directly or issue a letter of credit to guarantee payment. In some cases, the lender can also assist with documentation, insurance, and even collecting payment from your customer.

Approval often depends on the strength of the order and the business credit score of your customer or supplier, not just your own financials. This makes trade finance a flexible option for businesses looking to grow without putting strain on their working capital.

What are the benefits of trade finance?

  • Accept bigger orders

    Get the funding needed to take on bigger orders so that you can grow your revenue, without straining your cash flow.

  • Diversify your customer base

    Work with overseas suppliers and manage your international transactions with confidence.

  • Negotiate better terms

    You can negotiate better supplier terms by offering quicker or guaranteed payments.

  • Boost your cash flow

    Bridge the gap between paying suppliers and receiving customer payments, keeping operations smooth.

How does trade finance work?

Trade finance is designed to support the buying and selling of goods, especially in international trade. Here's a simple breakdown of how it typically works:

  1. You agree to a deal with a customer and issue a purchase order to your supplier.

  2. You apply for trade finance. The lender checks your credit profile and the details of the transaction.

  3. If approved, the lender either pays your supplier directly or provides a letter of credit to guarantee payment.

  4. The supplier ships the goods to you or directly to your customer.

  5. Once the order is complete and you've been paid by your customer, you repay the lender.

This process makes it easier to fulfil orders you wouldn’t normally be able to fund on your own.

What are the types of trade finance?

Trade finance can be structured in different ways depending on your needs. Here are the most common options:

  • Letter of credit: A letter of credit acts as a guarantee from the lender that the supplier will be paid once the correct shipping documents are provided. This option reduces risk for both parties.

  • Trade credit insurance: Trade credit insurance protects your business if your customer doesn’t pay. This gives you peace of mind, knowing that your business will be paid by the insurance company in this instance.

  • Export factoring: Export factoring involves selling your unpaid invoices to a finance company (called a factor), which gives you an advance on your invoice. This improves your cash flow while you wait for customers to pay.

  • Trade loans: Trade loans are short term loans that help you pay for goods or materials upfront. You repay the loan once the order is fulfilled.

Why get trade finance with Capitalise?

  • Compare offers from 100+ lenders

    We work with over 100 trusted lenders, so you can see multiple funding options with just one application. This saves time and lets you find the best deal for your business.

  • Expert help, from start to finish

    Our dedicated funding specialists are here to guide you through every step. We’ll explain your options clearly, answer your questions, and help you make a confident decision.

  • Clear, honest advice

    We’re regulated by the Financial Conduct Authority (FCA), and we’re upfront about any commissions or fees. You’ll always get transparent information so you can make fully informed choices.

  • Faster applications

    With our partnership with Plaid, you can securely connect your bank account during the application. This allows lenders to review your information faster and get funds to you sooner.

 Ready to grow your business with trade finance?

Compare offers from over 100 lenders and get expert support to find the right solution for your business, all in one place.

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