TRADE FINANCE – BG, SBLC & LC – Worldwide
Trade finance signifies financing for trade transactions and it relates to both domestic and international trade. A trade transaction requires a seller of goods or services as well as a buyer. Various intermediaries such as banks, financial institutions or large private & institutional lenders can facilitate the trade transaction financing. Trade Finance is important to every business involved in cross-border trade. With a worldwide shortage of trade finance impacting small businesses and capital markets around the world, we are committed to assist our clients to get through this shortage by securing the trade funding they need.We are a group of seasoned professionals mandated by global leaders in providing bank instruments such as Bank Guarantee (BG), Stand By Letter of Credit (SBLC), Documentary Letter of Credit (DLC or LC).
We can arrange issuance or monetize financial instruments under one roof. Bank Instruments are Issued through top rated Banks, They are cash-backed and stand as obligation from the Bank on behalf of clients’ for their credit facility. The Bank Instruments can be used for securing funds for projects, business expansion and Private Placement Programs (PPP) and we provide these clients’ requirements at ease.
We bring decades of international trade finance expertise to bear on every transaction, providing real-world trade finance solutions with an array of funding options to individuals, companies, governments and NGOs throughout the world. We arrange trade financing through our strategic partners and their alliance to private and institutional lenders, including investment banks, merchant banks, private banks, trusts and other lending institutions. Our network team of experienced professionals work seamlessly by providing the needed trade finance solutions in-order to make doing business globally easier and more profitable.
Some types of trade finances are:
- Trade Credit – Normally the seller requires payment for goods in 30, 60 or 90 days post shipment. …
- Term Loans.
- Cash Advances. …
- Receivables Discounting. …
- Leasing and Asset-backed Finance. …
- Other types of Business Finance.
Through our professional interaction and in-house facilities, Bank Guarantee (BG) and Stand By Letter of Credit (SBLC) can be issued to both local and overseas beneficiary from any top 25 world bank, interest rate at 4% p.a. These instruments can be used to get loans, secure credit lines, PPP, joint ventures, trading, signature projects etc. The minimum BG/SBLC amount is $ 1M and can be upto $ 10 Billion. The full procedures, terms and conditions will be communicated to serious customers.
We can arrange, underwritten by an European Brokerage a series of registered Bonds and offering. These Bonds for sale through broker dealers around the world. These Notes would be listed on DTC/Euroclear for sale. We can accommodate clients who require a minimum of $5M with no maximum.
Structured Note Program:
A program backed by a major financial institution that guarantees the principal and interest for project financing. This program is for clients who requires a minimum of $20 Million. AAA or rated higher institution will be the guarantor of not only the principle but the interest payments as well using their portfolio of $ 30 Billion plus of fortune 500 companies as collateral.
Documentary Letter of Credit: (DLC or LC)
(Documentary Letter Of Credit (DLC or LC) is the bank’s obligation to pay the seller of goods or services a certain amount of money in the timely submission of documents confirming shipment of goods or performance of contractual services. Documentary Letter Of Credit is one of the most important means of financing in the international trade, as the letter of credit is a tool that removes most of risks as from the buyer (importer) and from the seller (exporter).
Parties to a Documentary Letter of Credit / Letter of Credit
- Applicant (importer) requests the bank to issue the LC
- Issuing bank (importer’s bank which issues the LC [also known as the Opening banker of LC])
- Beneficiary (exporter)
Types of Documentary Letter of Credit
Under this LC, documents are payable at the sight / upon presentation of the correct documentation.
For example, a businessman can present a bill of exchange to a lender along with a sight letter of credit and obtain the necessary funds right away. A sight letter of credit is more immediate than other forms of letters of credit.
Acceptance Credit / Time Credit (Usance Bills)
The Bills of Exchange which are drawn and payable after a time period are called usance bills. Under acceptance credit, these usance bills are accepted upon presentation and eventually honoured on their respective due dates. For example, a company purchases materials from a supplier and receives the goods the same day with the bill of exchange. The purchasing company may have upto 30 or 60 days time to pay it. This 30 or 60 day period marks the usance for the sale.
Revocable and Irrevocable Credit
A revocable LC is a trade credit, the terms and conditions of which can be amended/cancelled by the Issuing Bank. This cancellation can be done without prior notice to the beneficiaries.
An irrevocable credit is a credit, the terms and conditions of which can neither be amended nor cancelled. Hence, the opening/issuing bank is bound by the commitments given in the LC.
Only Irrevocable LC can be confirmed. A confirmed LC is one when a banker other than the Issuing bank, adds its own confirmation to the credit. In case of confirmed LCs, the exporter’s/beneficiary’s bank would submit the documents to the confirming banker (importer’s bank)..
In a back –to-back credit, the exporter (the beneficiary) requests their banker to issue an LC in favour of it’s supplier to procure raw materials or goods on the basis of the export LC received (from the applicant’s/importer’s bank). This type of LC is known as Back-to-Back credit.
Example: An Indian exporter receives an export LC from his overseas client in the Netherlands. The Indian exporter (the beneficiary) requests their banker to issue an LC in favour of his local supplier of raw materials or good. The bank issues an LC backed by the export LC received by the beneficiary (exporter).
While an LC is not a negotiable instrument, the Bills of Exchange drawn under it are negotiable. A Transferable Credit is one in which a beneficiary can transfer his rights to third parties. Such LC should clearly indicate that it is a ‘Transferable’ LC.