Financial advice is the key to achieving your investment goals. We offer a range of trade financial instrument solutions at Trade Finance Capital, ensuring quality, safety, and security in all your transactions. We are a financial service provider specializing in financial instruments. We keep complete transparency and will never disclose personal information.
Standby Letter of Credit (SBLC)
Documentary Letter of Credit (DLC)
A guarantee issued by a bank or a financial institution to pay a beneficiary on a client’s behalf in a situation where the applicant defaults are known as a standby letter of credit (SBLC). This was developed due to the legal limitation put by the US regulator on the bank’s authority for issuing guarantees.
A standby letter of credit (SBLC) can protect the seller or exporter and the buyer or the importer in getting paid and receiving ordered goods as in agreed conditions. SBLC is a direct guarantee that the bank to pay the recipient on a client’s behalf if the client defaults. Some of the most common situations in which the SBLC is used are in repayment of trade loans, delivery of goods on an open account basis, or securing payment for goods/ services delivered by third parties.
A Documentary Letter of Credit (DLC) is an assurance provided by a bank or trade finance institution to ensure the importer/buyer that they receive the goods under the terms and conditions as initially set out and payment to the supplier as pre-agreed. It is ideal for meeting short-term needs and for new business relationships. The bank or financial institution will act as an intermediator, ensuring that both parties’ terms specified in the DLC are fulfilled to receive the payment.
If the buyer cannot pay after the terms specified in the DLC are fulfilled, the seller/exporter can make a compliant document demanding payment, which the bank or financial institution is obligated to pay.
The documentary letter of credit (DLC) showcases the documents and information needed by the beneficiary on presentation, including the expiry information, like the date and time of the letter. The compliant presentation is a guarantee given to the beneficiary by the documentary letter of credit to get paid. The only criterion is that the delivery conditions should be met.
Bank Guarantees (BG)
Bid Bond, Performance Bond, Warranty Bond, Letter of Indemnity
BID BOND or TENDER BOND is usually issued for bidders on construction or similar tender-based projects. A bid bond is a debt secured by a bidder. In effect, it secures the bidder’s investment in the project and discourages bidding by less serious players.
PERFORMANCE BOND or CONTRACT BOND is utilized mainly in the real estate industry to ensure a contractor completes a designated project. A bank, insurance company, or financial institution issues a performance bond in favor of a beneficiary by order of an applicant against the applicant’s failure to meet its obligations per an underlying contract. A performance bond often covers 100% of the contract value and can replace a bid bond when the applicant has been awarded a contract.
WARRANTY BOND is a contract between a project/property owner, a contractor, and a surety company. The bond promises that any defects found in the original project will be repaired during the warranty period. Frequently used in the housing and construction sector, a warranty bond guarantees an investor that a contractor will resolve all covenants related to materials used and work done before the warranty expires.
LETTER OF INDEMNITY guarantees that contractual provisions will be met; otherwise, financial reparations will be made. A letter of indemnity is often utilized to request replacements for lost shares from a company’s treasury.
RENTAL GUARANTEES promise payment to a landlord in case a tenant defaults financially. Since the risk of a tenant defaulting can be highly harmful to a property owner, rental guarantees are special tools that give security to industrial and commercial landlords.
CONFIRMED PAYMENT ORDER is an irrevocable obligation to pay. In most cases, the confirmed payment order is conditional on the successful completion of a project.
Bank Confirmation Letter (BCL), Proof of Funds (POF), Ready Willing and Able (RWA), Pre-Advice
A bank confirmation letter (BCL) is a letter given by a bank or financial institution as a confirmation for a loan and a line of credit extended to a borrower. This letter acts as an official surety on behalf of a borrower that a person, organization, or company is eligible for borrowing a certain amount of funds for a specific purpose. The bank confirmation letter assures a third party that the borrower has sufficient financial resources to complete a particular transaction, like purchasing goods.
Proof of funds (POF) is a document or bank statement that showcases the financial capability of a person/company to undertake the transaction. With this, the other party or the parties will easily be ensured that the financial capacity required for the transaction is procurable and legitimate. The document is mainly used to fund projects requiring considerable high investments, such as trade in bulk commodities, oil and gas, and real estate transactions.
Ready willing and able (RWA) is a document that a bank or financial institution issues on the client’s behalf. This document showcases the capability and intent (both financially and legally) for entering into financial transactions. The RWA’s are also referred to as the bank comfort letters.
A pre-advice message is sent between two banks involved in a transaction to ensure the safety of the wire transfers when large sums of money are involved. It is issued by one bank to another bank notifying the issuance of documentary credit and advising receiving bank to send their acknowledgment. The main objective of the message is to reconfirm that all the details provided by the recipient are correct before the wire transfer and get assured that the beneficiary has a way to withdraw money from the bank. The advising bank will also notify the beneficiary without opening advice of credit, thus enabling the seller to reconfirm to process the buyer’s order.