We make it possible for you to open a letter of credit even if you don't currently have a bank credit line that allows you to do so, or if you're up to your credit limit with your bank.
Such instruments are also called conditional letters of credit, accommodation letters of credit, or special clause letters of credit.
Your business success depends on having the money available when you need it. The global banking crisis showed once again how critically important it is to have access to capital. We were opening letters of credit for our clients during the darkest banking days.
Let's assume that you just got an order from your customer, and you need to open a $250,000 letter of credit to your supplier quickly. You know that your bank will require substantial collateral to issue the LC for you. You've hit your credit limit, have other deals working, or are undercapitalized, so you don't want to miss the business, but you are out of options.
That's where we come in. We will arrange a documentary letter of credit for 90 days (more or less, as needed) for a nominal amount, generally, just the LC opening charges. We will expect you to have the money needed to pay for the shipment after the issuing bank receives shipping documents from the supplier. Instead of tying up your money for months, you will tie up your money just long enough to clear the goods into the country and send an invoice to your customer, after which you can factor the invoice. Of course, if you're dissatisfied with your factor, we work closely with several reliable factors too, and will make the introduction for you.
These LC's are issued by reliable banks in the U. S. and elsewhere. Because of the way they are structured, you will not have to put up collateral, or provide personal or corporate guarantees. The supplier is secured as he retains title to the goods until he has received payment, which is key to the success of all DLC issuance.
We have available bank accounts at prime banking institutions, which are used to provide the credit lines supporting the LC issuance. Once the LC is issued, and you have a copy of the bill of lading, you will still need to provide to our bank the funds to pay your end supplier. When we receive that payment, we release in your favor the documents which control your shipment.
Conditional letters of credit are designed to allow issuance without provision of specific collateral, apart from payment for the LC opening charges. We have had excellent acceptance from suppliers in China, Pakistan, Bangladesh, India, many European countries, Africa, and the middle East. When you, the client, wish to open a letter of credit, we review the details of your transaction so that we can make a decision about the transaction on its merit. We can open letters of credit for any goods that do not violate our ethical and legal criteria. Prohibited transactions would include those involving weaponry or ammunition, or involving principals in countries which are on international restriction lists.
If you would like to apply for an LC, send us a copy of the supplier's proforma invoice, and we will contact you about any further required information. We will then provide a draft of the LC for approval by your supplier. Once they have approved it........you pay for the LC issuance, and it is issued. Usually it takes only a couple of days to issue a letter of credit once compliance paperwork and funds are received.
Step by step LC procedures
1. The company applying for a letter of credit submits preliminary application and two other documents: proforma invoice from supplier to applicant, and purchase order from applicant to supplier.
2. We provide a draft LC based on the submitted application, as well as a request for further compliance documentation.
3. Applicant shows draft to his supplier for approval.
4. Once supplier has approved, applicant notifies us of that approval and sends in funds to take care of the LC opening fees.
5. Once funds are received by LC provider and all documentation is complete, the LC is generally issued within 72 business hours and sent by SWIFT to the beneficiary's bank.
6. Beneficiary ships goods and sends the shipping documents to the bank that issued the LC.
7. We notify applicant that goods have been shipped, and where requested, provide copies (but not originals) of shipping documents to the applicant. We also give applicant a target date by which he should have sent in the funds due to the supplier. Funds to be passed on to the supplier are expected in within three weeks of receipt of the shipping documents. Note that timing of funds due in order to pay your supplier and get the documents released are based on when goods are shipped, which may be much earlier than the expiration date of your LC.
8. Applicant wires in money to satisfy amount due the supplier.
9. Bank releases documents to the applicant, who now unloads his goods.