Funding Against a Letter of Credit

Question

I receive payment via LC from a number of my export clients, the LC is irrevocable & our money is usually out for a maximum of 21 days.

My question is:

Are there any facilities that offer credit against the letter of credit?

Answer

Hi James
Assuming that you are using a local bank Barclays HSBC etc you could go to your bank manager and request that they credit your account with the value of the LC they will however make a charge on the total value of the LC probably around 1%.but you will get payment immediately.
Just take care on the banks that are issuing the LC to you as there can be charges when the LC is passed to a clearing bank and then to your bank, make sure the issuing bank is recognized by your bank.
If you need any further info just send me a mail

Regards David

Answer

Hi James

VTB Bank provides loans against letters of credit as of the date of the opening of these letters. The loans are extended in roubles or foreign currency and can be secured for the following terms:
Short-term – under one year;
Medium-term – from one to three years;
Long-term – over three years.

The loan amount is determined based on the letter of credit amount, as well as the evaluation of the client’s creditworthiness and legal capacity, its credit record, and the specifics of the project to be financed.

Best Regards

Ian

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