Direct answer
Trade finance funds the import and export cycle — supplier payments, letters of credit, and inventory — covering the gap between paying for goods and being paid by customers. In Australia it is arranged through banks and specialist funds, secured by the goods themselves, receivables and a general security agreement, typically funds in seven to twenty-one business days, and runs from around thirty days out to twelve months per transaction.
Who uses it and why
Importers and exporters face a cash-flow timing gap that is structural to the nature of international trade: goods often need to be paid for, in full or with a deposit, before or on shipment, while the business's own customers may not pay for those goods until weeks or months after they arrive and are on-sold. An importer bringing in a shipping container of stock needs to pay the overseas supplier well before local customers are invoiced. A wholesaler fulfilling a large purchase order needs working capital to buy the inventory before the sale is realised. An exporter shipping goods on documentary terms needs funding to bridge between production cost and payment under the letter of credit.
Trade finance exists specifically to fund this gap, structured around the mechanics of the trade itself — the purchase order, the shipping documents, the letter of credit — rather than as a general-purpose loan. Typical borrowers are importers, exporters and wholesalers whose business model depends on this buy-then-sell cycle, particularly where volumes or order sizes are large relative to the business's own working capital.
The gap this product funds tends to widen rather than narrow as a business grows, since larger orders and longer supply chains generally mean more capital tied up for longer before it converts back to cash. Businesses that outgrow their own working capital's ability to fund this cycle turn to trade finance not because the underlying business has weakened, but precisely because it is scaling faster than retained earnings alone can support.
What lenders look at
The transaction itself is the focus of assessment: the supplier relationship, the terms of purchase, the shipping and documentation involved, and — critically — the confirmed sale or strong sales channel for the goods once they land. Financing can extend up to 100% of the goods' cost in a well-structured transaction, reflecting how directly the facility is tied to a specific, identifiable trade.
Lenders want visibility of the full cycle: purchase orders or contracts with the supplier, shipping and customs documentation, and evidence of the buyer or sales channel on the other end, since trade finance is ultimately repaid from the proceeds of selling the goods. The business's own trading history and relationship with its supplier base is assessed alongside the specific transaction, since a track record of successfully completed trade cycles gives a lender confidence in how a new one will play out. Given the specialised, documentation-heavy nature of these facilities, the panel is weighted toward banks and specialist trade finance funds who understand letters of credit, bills of lading and the broader mechanics of international trade specifically.
Currency exposure is a related consideration many importers and exporters manage alongside their trade finance facility, since goods are frequently priced in a foreign currency between the point of order and the point of payment. While hedging itself sits outside what a trade finance facility provides, lenders experienced in this space understand the interaction and can structure timing accordingly.
Documentation is full-doc across the panel, reflecting both the complexity of the underlying transactions and the need for lenders to verify the goods, the supplier and the buyer at each stage. Credit history is assessed with reasonable, though not unlimited, flexibility — minor, explained defaults will not typically exclude an otherwise strong trading business, but this is a more conservative-tolerance product than several others in the category, given the reliance on successful execution of the underlying trade.
Typical terms
|
|
| Size |
$100,000 to $20m+, subject to lender assessment |
| LVR |
Not applicable — financing typically extends up to 100% of goods cost |
| Term |
Typically 30 to 180 days per transaction, with facilities extending to twelve months |
| Speed |
Indicative funding in 7–21 business days from a complete application |
| Security |
The goods, receivables, and a general security agreement |
| Pricing |
Priced on risk and security; indicative range on enquiry |
Structures we see most
Supplier payment finance. Funds payment to an overseas or domestic supplier ahead of the business receiving payment from its own customers, sized against the specific purchase order or contract involved.
Letter of credit facility. Provides or supports a letter of credit in favour of an overseas supplier, giving that supplier confidence of payment on shipment while the buyer's own facility funds the underlying obligation.
Inventory finance. Funds stock once it has landed and is held pending sale, bridging between the cost of the inventory and the cash generated as it is sold down.
Purchase order finance. Funds the cost of fulfilling a specific, confirmed purchase order from a business's own customer, sized directly against that order and its confirmed sale value.
Revolving trade facility. A standing facility that can be drawn against as new trade cycles arise, rather than arranged fresh for each transaction, suiting an importer or exporter with regular, ongoing trade volume.
Costs and how we're paid
Pricing on trade finance reflects the specific transaction, the supplier and buyer relationships involved, and the business's trading history, and is quoted on enquiry once a lender has reviewed the full transaction — no flat rate applies across the product. Facilities may carry an establishment fee and transaction-specific charges, including letter of credit fees where applicable; all costs are set out in the facility offer before a borrower commits.
Solara is remunerated by the lender, the borrower, or both, depending on structure, which may include a commission from the lender and/or a broker fee agreed with the borrower. Any commission or fee is disclosed in writing before an application proceeds.
Process and timing
- Initial scoping call — typically same day. We confirm the trade cycle, the supplier and buyer relationships, and the specific transaction or ongoing volume involved.
- Document collection — typically 3–7 business days. Purchase orders or contracts, shipping documentation, financials, and evidence of the sales channel for the goods.
- Lender matching and submission — typically 2–5 business days. We place the file with the banks and specialist funds whose trade finance appetite matches the transaction and industry.
- Approval and offer — typically 5–14 business days, reflecting the documentation and verification a trade transaction requires.
- Facility setup and drawdown — typically 2–5 business days once terms are accepted, timed to the supplier payment or shipping schedule.
Frequently asked
What is trade finance?
It is funding for the import and export cycle — supplier payments, letters of credit, and inventory — that bridges the gap between paying for goods and being paid once they are sold, structured around the mechanics of the specific trade.
What is a letter of credit, and how does trade finance relate to it?
A letter of credit is a bank's undertaking to pay a supplier once shipping conditions are met, giving the supplier payment security; trade finance can fund or support the underlying obligation the buyer owes once that letter of credit is drawn upon.
Can trade finance fund a single shipment or purchase order?
Yes — purchase order finance and supplier payment facilities are commonly arranged around a single, specific transaction, sized directly against that order's value.
Do I need an established trading history to access trade finance?
Generally, yes, though the emphasis is as much on the strength and clarity of the specific transaction — the supplier, the goods, and the confirmed buyer — as on a long trading history, particularly for a well-documented single-transaction facility.
How is trade finance different from invoice finance?
Trade finance funds the earlier stage of the cycle — paying for and holding goods before they're sold — while invoice finance funds the later stage, advancing against invoices already issued to customers. Many importers and wholesalers use both together.
What documentation is required?
Full financial disclosure across the panel, alongside transaction-specific documents such as purchase orders, supplier contracts, shipping and customs paperwork, and evidence of the buyer or sales channel for the goods.
Can trade finance be used for domestic transactions, not just imports and exports?
Yes — supplier payment finance and inventory finance can support domestic supply chains as well as international trade, wherever a similar cash-flow gap between paying for goods and being paid for them exists.
How long does trade finance typically run for?
Individual transactions typically run thirty to one hundred and eighty days, matched to the specific trade cycle, though a revolving facility can support ongoing trade volume for up to twelve months or longer at a time.
Is trade finance only available to large, established importers?
No, though scale and an established supplier relationship do help — smaller and newer importers can still access this product, generally with more conservative terms until a track record of successfully completed trade cycles is built up.
Related products
Invoice finance — the natural companion facility, funding the later stage of the trade cycle once goods are sold and invoiced to the business's own customers.
Business lines of credit — worth considering directly for general working-capital needs alongside, or instead of, a transaction-specific trade facility.
Asset & equipment finance — the closer match where the requirement is financing owned equipment or vehicles rather than goods held for resale.