Contract-Backed Financing: Fund the Contracts You’ve Already Won
Contract-backed financing turns a signed contract with a creditworthy buyer into upfront funding. How it works step by step, what lenders need and who qualifies.
Contract-Backed Financing: How It Works and How to Qualify
Contract-backed financing lets a company raise funding against a signed contract with a creditworthy buyer, so the cash needed to deliver the contract is advanced up front and repaid from the buyer's payments.
Financely structures these facilities and places them with banks, trade finance funds and private credit lenders. See our contract-backed trade finance services.
How contract-backed financing works
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1
Contract signed
Your company signs a supply, service or offtake contract with a creditworthy buyer.
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2
Lender review
The lender assesses the buyer's credit, contract terms and your ability to deliver.
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3
Proceeds assigned
Contract payments are assigned to the lender and routed to a controlled account.
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4
Funds advanced
The lender advances a share of contract value to buy inputs, produce or deliver.
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5
Delivery and invoice
You perform the contract and invoice the buyer.
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6
Buyer pays
The buyer pays into the controlled account. The lender is repaid and the balance is released to you.
What lenders need to see
A creditworthy buyer. The buyer's credit quality drives the facility more than your own balance sheet.
Assignable payment rights. The contract must allow proceeds to be assigned, without restrictions that block the lender's security.
Delivery capability. Track record, suppliers and capacity to perform, since non-delivery is the main risk.
A clear margin. Enough profit to repay the lender with headroom. Our guide on how to secure contract-backed trade finance covers the full checklist, and our Lender-Ready Package prepares it.
Who it is for
Suppliers, contractors, commodity producers and service companies that have won contracts larger than their working capital, including commodity suppliers and firms delivering public sector or EPC contracts.
Won a contract you need to fund?
Share the contract, buyer, value and timeline. We will assess financeability and set out the lenders that fit.
Frequently asked questions
What is contract-backed financing?
Contract-backed financing is funding advanced against a signed contract with a creditworthy buyer, repaid from the payments due under that contract rather than from the company's balance sheet.
What kinds of contracts can be financed?
Supply and offtake contracts, government and public sector contracts, EPC and construction contracts, and long-term service contracts, provided the buyer is creditworthy and the payment terms are clear.
How much of the contract value can be financed?
It depends on the buyer's credit, the delivery risk and the margin. Lenders advance a share of contract value and expect the company to fund part of the cost.
Is Financely a lender?
No. Financely is an advisor and arranger. You close directly with the lender.
This page is for general information only and does not constitute legal, tax or investment advice. Financely is an advisory and arranging firm, not a lender or broker-dealer. Any financing is subject to the lender's underwriting, due diligence, credit approval, documentation and conditions precedent, and no outcome or timeline is guaranteed.
