STANDBY LETTER OF CREDIT

A payment guarantee provided from a bank to their client

Process and Payment Structure 

Standby Letter of Credit

The Stand by Letter of Credit aka Standby LCSBLC is a guarantee payment issued by a bank on behalf of a client that is used as "payment of last resort" should the client fail to fulfill a contractual commitment with a third party. Standby letters of credit are created as a sign of good faith in business transactions and are proof of a buyer's credit quality and repayment abilities

 

Thus, it is ideal for companies planning to expand their business but without giving up their equity. Hence, it improves company’s cash flow. Also, it allows companies to use their funds for alternate purposes before payments become due.

 

Parties involve in Stand by Letter of Credit:

  • applicant name
  • beneficiary name
  • applicant address beneficiary
  • address beneficiary
  • bank and swift code

Data:

  • beneficiary bank
  • account number
  • beneficary bank address issue
  • date expiry
  • place amount (in figures)
  • amount (in words)

When requesting a SBLC a business owner proves to the bank he is capable of repaying the loan.

 

Collateral may be required to protect the bank in case of default. The bank typically provides a letter to the business owner within one week of receiving documentation.

 

Transaction details supporting documents required: copy of indentification (passport) and articles of incorporation if applicable:

  • executive summary, proforma invoice, etc.
  • authenticate i hereby acknowledge that the information provided on this application is accurate. applicant signature date

Process & Payment

Below, the normal procedure for the submission and issuance of a Standby Letter of Credit from  Bank 

 

Step 1:

Application is made to Bank for opening of a BG/SBLC including but not limited to the following:

  1. BG/SBLC application form (Provided by Bank upon request).
  2. BG/SBLC indemnity signed and notarized.
  3. Desired verbiage of BG/SBLC, If none provided Bank will provide its normal BG/SBLC verbiage.
  4. SWIFT code and Address of beneficiary Bank.
  5. Compliance  documents including but not limited to:
  • Passport copy of applicant
  • Articles of incorporation of applicant company
  • Brief summary and/or business plan of underlying transaction.

 

Step 2:

  1. The departament of compliance reviews all documents presented and evaluates acceptability of documents.
  2. The Departament of compliance then either approves application or denies and shall inform the applicant of such decision.

 

Step 3:

  1. The Bankprepares draft of the BG/SBLC as it is comfortable to issue and forwards to client for approval.
  2. All drafts shall be in lined with rules and regulations governing the issuance of BG/SBLC.

 

Step 4:

  1. The client approves the draft and:
  • Signs a contract agreeing to the terms and conditions of issuance and issuance charges as negotiated.
  • The Departament of Compliance issues the invoice for the agreed upon charges

 

 Step 5:

  1. Client makes payment of charges as per agreed upon payment structure.
  • Client shall provide TT/Wire copy of payment made to SCB account.
  • The Departament of Compliance   shall confirm to client credit of funds upon receipt of funds to Departament of Compliance account.

 

Step 6:

  1. The Bank uploads draft to SWIFT system and provides copy to applicant for final approval of message.
  2. Upon approval given by the applicant Bank then releases the SWIFT to beneficiary bank coordinates.

 

Step 7:

  1. Copies of released SWIFT are then forwarded to the client via email or hard copy as requested (In case the client is represented by an advisor, then it is forwarded to the advisor only).

 

Step 8:

  1. Any amendments to BG/SBLC are subject to approval of Departament compliance.
  2. The following is the procedure for payment schedule. The following are general terms:
  • Fees are paid before the issuance of each SWIFT message. In the case of RWA for a BG/SBLC fees need to be paid before hard copy/email issuance.
  • The Departament of Compliance does not engage in JV payment structures and will not issue any message for zero monies paid upfront.
  • SCB will not accept payment via ICBPO.
  • If the Departament of Compliance   fails to deliver the instrument as agreed upon, the same shall return the fees paid for that issuance.
  • The fees paid for an RWA and MT799 will be used as credit towards fees to be paid for the MT760.
  • In the case that Bank successfully delivers RWA/MT799 and client does not go ahead with MT760; fees paid for RWA and MT799 will not be returned.
  • All fees shall be agreed upon and stated in a formalized contract.

Important Notice

There are cases where others have pretended to represent and issue instruments in the name of Platinum Invests.

 

Platinum Invests is not responsible for these issuances and bears no responsibility for those that are not authorized directly from Platinum Invests. Clients are urged to verify the authenticity of any documentation before paying fees/commissions. Platinum Invests is not responsible for any fees/commissions not paid directly to Platinum Invests. If you suspect fraudulent activity please contact us immediately.

Direct Communication

+34 961318773

 project-financing@platinum-invests.eu

compliance@platinum-invests.eu

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