Advances at each stage
Borrower must show
Ratio and cost of advance
Financing of margincalls
Real function, i.e. adds value.
Track record. (Defaults are most likely to occur in the first 3 to 5 years of
Understanding of the coffee business.
Deals are correctly structured.
Ratio or percentage of advance: highest.
Interest rate: lowest.
Sold to approved buyer.
Documents and/or payment via bank.
Exposure has been hedged, or PTBF sale has been 'fixed'.
Appropriate business plan and reporting systems.
In-house financial and volume limits.
Clear document flows, proper stock rotation.
Pre-sold to approved buyer or hedged.
Depending on package and borrower's 'book'.
3. Export processing
Visible, permanent and pledgeable assets.
Ratio: lower again.
Cost: higher again.
4. Interior buying
Adequate warehousing and insurance.
Access to collateral management.
Ratio: lowest or even nil.
Depending on package and borrower's