Trade finance
Up to $5,000,000+ for the right business. Funds the gap between paying a supplier and getting paid yourself, domestic or international, with minimal paperwork under $250,000.
General information only
Trade finance funds the gap between paying a supplier and getting paid by your own customer, covering the purchase of stock or equipment before it’s sold or put to work. It’s secured by the transaction itself, not property, and it works whether you’re buying from overseas or from another Australian business.
The name makes it sound like shipping containers and customs brokers. Most of the time it’s a Melbourne business paying a Sydney supplier.
What are the main types of trade finance?
The core instruments are a letter of credit (a bank guarantee that payment reaches your supplier once shipping documents are verified), a documentary collection (the banks pass the shipping documents along but don’t guarantee payment, so it’s cheaper and riskier than a letter of credit), a pre-shipment or import loan (funds advanced to purchase stock or equipment before it is sold), and supply chain finance (a third party pays your supplier early on your behalf). Trade credit insurance sits alongside these rather than funding anything: it covers you if your buyer doesn’t pay. Which one fits depends on whether you’re buying, selling, domestic or international.
- 01Domestic or international. The structure changes, the purpose doesn’t.
- 02You can use it to purchase equipment overseas, then refinance it onto a traditional asset finance product once it lands in Australia.
- 03Under $250,000, often approved on bank statements and basic ID. Details below.
- 04Limits can reach $5,000,000 or more for the right business, though most facilities run to a maximum term of 90 to 120 days.
What are the four pillars of trade finance?
There’s no single agreed list, and anyone presenting one as settled fact is tidying up something messier. The framing most often used comes from the International Chamber of Commerce, which defines trade finance as a service enabling businesses to finance, monetise, risk mitigate and settle trade flows
. That’s four functions, not four products.
- 01Finance. Somebody funds the gap between paying your supplier and getting paid yourself. This is the part most people mean when they say trade finance.
- 02Monetise. Turning something you hold on paper (an invoice, a purchase order, stock in transit) into cash before it would otherwise convert.
- 03Risk mitigation. Reducing the chance you pay and the goods never arrive, or you ship and never get paid. Letters of credit and trade credit insurance both live here.
- 04Settlement. The mechanics of money and documents changing hands, in the right order, across two jurisdictions and two banks.
Why it matters: a facility that’s strong on financing can be weak on risk mitigation. An import loan gets you the cash but does nothing to protect you if the goods never ship. That’s the gap a letter of credit or trade credit insurance fills. Ask which of the four a quote covers.
Definition source: ICC Academy, What is trade finance?
Is trade finance risky?
Treated properly, trade finance is a cash-flow timing tool, not a gamble. It’s secured by the specific transaction, and reputable lenders structure it to reduce risk on both sides rather than add to it. Where it gets risky is mismatching the facility to your cash cycle. If you won’t be paid back inside 90 to 120 days, you need a longer runway than trade finance gives you.
Equally, some lenders will restrict what you can use the funds for or expect you to run exclusively with them. Read the terms before you sign, as with any working capital facility.
How much can you access, and what documentation do you need?
Facilities on our panel run up to $5,000,000 or more for the right business. The paperwork depends on size. Below $250,000, many lenders approve on alt-doc terms: business bank statements and basic ID, no full financial pack. Above $250,000, expect complete financials and possibly more security, depending on the amount. Our trade finance calculator lets you estimate the cost of a facility before you apply.
| Facility limit | Up to $5,000,000+ for the right business |
| Term | Typically 90 to 120 days maximum, not suited to longer cash cycles |
| Documentation | Alt-doc (bank statements + ID) up to $250,000; full financials above that |
| Scope | Typically domestic; overseas purchases achievable with the right lender |
Most trade finance facilities run to a maximum term of 90 to 120 days. If your cash cycle typically runs longer than that, a business overdraft is usually the better-fitting product.
What’s the difference between trade finance and invoice finance?
Trade finance funds the purchase side: paying a supplier for stock or equipment before it’s sold. Invoice finance funds the sales side, releasing cash against invoices you’ve already issued to your own customers. Used together, they cover both ends of the same cash-flow gap: trade finance gets the stock in the door, invoice finance gets the cash out once it’s sold.
Here’s the wait that creates the need. The Payment Times Reporting Regulator, which tracks how large businesses pay their small business suppliers, reported for the six months to 31 December 2025 that the average agreed payment term was 29 days, but that reaching 95% of small business invoices took 55 days. Its own wording is that it takes almost double the average agreed term for the vast majority of invoices to be paid, and 31.5% aren’t paid within terms at all.
That’s the gap trade finance bridges. Your supplier wants paying on their terms, usually before the goods ship. Your customer pays on theirs, and the tail runs well past what was agreed. Trade finance covers the first half, and most facilities cap at 90 to 120 days because they’re built to be cleared by the sale, not to carry the whole cycle. If your own customers are large businesses, the 55-day figure is the one to plan against, not the 29-day term on the invoice.
Payment Times Reporting Regulator, Regulator’s Update, August 2026, covering 1 July to 31 December 2025. The Regulator notes measures introduced from 1 July 2024 are not directly comparable with earlier reporting cycles.
Not every business needs both, but for the right trading pattern (buy stock on trade finance, sell it, then draw against the resulting invoice), the combination closes the entire working capital cycle rather than just one half of it.
Now applied to roughly $20bn of Australian exports, a real reason working capital timing has changed.
Sourced data: Australian Industry Group
Have 2026’s US tariffs changed anything for Australian importers?
Yes, for a meaningful slice of trade. That band now covers roughly 4% of total Australian exports and 0.8% of GDP, and Federal Treasury modelling puts the direct hit to Australian GDP at around 0.1% in 2025 and 0.2% in 2026.
The knock-on effect for importers is less about the headline number and more about timing: global trade tensions and longer lead times are pushing businesses to hold more inventory for longer, which ties up working capital exactly where it’s least convenient. Trade finance funds the stock or the shipment itself, so you’re not paying for it out of cash reserves while tariffs and freight keep moving.
Source: Australian Industry Group, Trade, Tariffs and Supply Chains.
Two things people get wrong about trade finance
It’s normally domestic, not just overseas
Most trade finance funds a purchase from another Australian supplier, not an overseas shipment. Buying from overseas is achievable too. It just takes the right lender and structure, like a letter of credit.
Overseas equipment doesn’t have to stay on trade finance
Buy equipment overseas on trade finance, and once it lands you can often refinance it onto asset finance. That’s a cleaner, longer-term structure than leaving it on a short-term facility.
How do you get a letter of credit?
A letter of credit is arranged through your lender before you place the order. It’s a bank guarantee that your supplier gets paid once they’ve verified the shipping documents, which gives an overseas supplier confidence to ship without payment upfront. Not every purchase needs one. Simpler domestic transactions are often funded with a plain pre-shipment loan.
Ecommerce Loans is a finance broker, not a lender. Rates and figures shown are indicative only and subject to individual lender assessment.
When is trade finance not the right call?
If your cash cycle (from paying a supplier to getting paid yourself) runs longer than 90 to 120 days, most trade finance facilities won’t fit, and a business overdraft is usually the better tool. It’s also the wrong call for a purchase without a clear, short sale or use cycle behind it, because the facility is built around that gap closing within its term.
If either sounds like you, tell us early and we’ll look at an overdraft instead.
Compare this against
Not sure trade finance is the right shape?
Is the gap on the selling side, waiting to get paid, not buying stock?
Invoice finance advances against invoices you’ve already issued, the mirror image of funding a purchase.
See Invoice finance →Buying equipment rather than stock or inventory?
Asset finance is built around a specific piece of equipment, not a supplier purchase.
See Asset finance →Want general working capital, not funding tied to one transaction?
An unsecured loan isn’t linked to a specific purchase or shipment.
See Unsecured business loans →How do you get trade finance?
Tell us the basics (what you’re buying, roughly how much, and your ABN). Under $250,000 we can often move on bank statements and basic ID alone, with no formal application or credit check at that stage. We flag the term length and documentation requirements on the shortlist before you apply, not after.
Want the numbers first? Try the trade finance calculator →
Run a wholesale or trade business? See how the facilities work together →
New to working with a broker? See how a business loan broker works →
Give us the basics below and we’ll call you within the hour, or at the time you choose, then come back with the two or three offers worth your time.