Loan Parameters:
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Commodities: Oil & gas, agricultural goods, metals
Type: Secured working capital finance with a pledge of inventory/receivable.
Structures: Goods-in-transit inventory finance, warehouse inventory finance, receivable finance, borrowing base finance, pre-export, prepayment loan, supply chain finance
Deal amount: $50,000 - $1,000,000 per shipment that continuously repeats and may overlap.
Facility limit: $1.5 – 3 million. Overlapping Deals cannot exceed this Facility limit.
Tenor: 30 – 90 days
Lenders: Unitranche loan per Deal.
85% senior lender debt
15% junior lender debt. HMX Finance as anchor lender
Advance rate: 80% of shipment value.
Non-committal: Lender lends on uncommitted basis.
Geography: Loans are made to borrowers globally.
Track record: Borrowers or their managers must have many years of experience and a solid track record.
Interest rate: Blended interest rate of 15% - 20% per annum. Senior lender’s target interest rate ranges between 13% - 18% per annum and Junior lender’s between 16% - 23% per annum. Interest is paid in arrears. Use actual/360 day convention to calculate interest.
Trade Finance Structures:
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Inventory Finance: The trader’s finished product inventory in transit or in a warehouse is pledged and monetized to raise working capital.
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Receivable Finance: The seller of a product transfers and assigns trade receivables to the lender. This accelerates receipt of sales proceeds from the product buyer.
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Pre-export: The seller of a product raises working capital prior to title transfer of a product to buyer.
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Prepayment Finance: The trader receives a loan prior to receiving title to the product from the seller. The trader is able to make an advance payment to the seller with the loan proceeds.
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Borrowing Base Finance: The trader pledges its pool of assets, mostly inventory and receivable, for a line of credit from the lender.
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Payable Finance: The buyer of a product delays payable payment to its seller. This payment deferral creates increase in working capital for the buyer.
Trade Finance Features:
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Short term: Each deal under any Program is less than 180 days. This reflects the cycle of the underlying trade flow.
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Collateralized: Each deal is backed by trade contracts. Collection rights are assigned to Hommocks.
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Uncommitted: No obligation for Hommocks to fund. Thus, $0 commitment fee charged to customer.
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Revolving: Hommocks focuses on the relationship between the seller and buyer. Hommocks seeks to finance multiple shipments that the seller makes to the buyer, each shipment corresponding to a deal. Not just one shipment will be financed.
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Transactional: Each deal has an independent invoice amount, pricing, start date, maturity date and customized terms and conditions.
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Self liquidating: Each advance made to the borrower is used to purchase and sell a product to a third party. The proceeds from the sale are sufficient to meet the borrower’s costs and be profitable.