When traders use commodities as their asset and doing there trading, it is called trade finance. It has a great history and it has existence as old as the China and the silk route and Mesopotamia and Europe. This was believed that, commodity trade had existence far before than Europeans settled in America which is known as the birthplace of stock market.
At the present time, commodity trade finance is a multi-billion business. Today, the entire world is experiencing the rising of goods and commodities are bought and sold. In order to back up them, obviously there are a number of financiers also needed to lend money in case traders requirement.
Suppose you are a trader and trading various crops, for this reason you need huge amount of money. So who will go to assist you in this scenario? If you’ll go to bank they will grant you loan only on the basis of balance sheet. This is the situation where trade finance and structured trade finance is very useful for the traders. The people those are associate with this business, they will provide you such assistance using the collateral of goods that you are trading and won’t emphasize your own balance sheet or any movable or immovable assets.
It is true that, every goods have special value of their own. For instance, wheat is worth many hundreds or more than thousands of dollars per ton, and then once you have purchased a big pile of wheat in one place, it’ll a great value. Different banks have different policies and some of them lend money against the complete value of wheat and minus a little amount of price as different kind of threats.
This principle is applicable in almost every commodity. A bank won’t provide you loan as far it is not sure about the deal has been structured by both buyer and seller. If there are any defaulters then bank will pose on the commodities automatically.
Structured commodity finance deals with complex arrangements where put in place to ensure the bank can take the possession and sell the underlying capital which is used for loan. There are some questions also arise that, is structured commodity finance is complicated or it won’t get effective without any competitor? Actually according to experts, this is very simple business and as the structures those are used in trade finance, loans must be high enough to warrant the involvement of highly-paid bankers even the lawyers.
So find out such companies those are expert in commodity trade finance and able to provide you perfect assistance when you will need that. So browse internet today and get the proper service provider to strengthen your trade.