Letters Of Credit (“L/Cs” for short) are valuable for financing trade activities in import-export, for guaranteeing loans, and for a variety of other financial transactions. To get an L/C or have one confirmed (evaluated as good) take thesesteps now;
- Become familiar with an international bank having a strong network of overseas correspondent banks and associates.
- Open an account.
- Introduce yourself to bank officers and discuss with them your plans to export.
- Meet the person in charge of international trade and exports
- Ask them about requirements for L/C’s or other available financing
Work with branches of overseas banks having offices in your country. A local branch can speed international transactions considerably.
- Insist that the bank have the ability to confirm unconfirmed L/Cs you might
- get from overseas. (When a bank confirms an L/C it — in effect — tells you that
- the L/C is good and can be trusted.)
When a bank issues an L/C in your favor — you can use the L/C to:
- Collateralize a loan you get for business or income real estate.
- Finance your imports which you sell in your own country.
You will be charged a nominal fee — let’s say, $5.00, to get the actual documentation
on the L/C. This amounts to $5.00 per $1000 L/C. Thus, on a $100,000 L/C you’ll pay
$5,000 when the L/C has been in force for one year. This will be about $200 a month.
But during that time you can use the L/C to do any of the transactions mentioned above. The L/C is like an advance confirmation that you can get a loan you can use
to import salable items.
Besides using an L/C as collateral you can also get many other useful services from your issuing bank. Thus, the bank:
- Can issue valuable trade leads, telling you who’s seeking what products or services in overseas countries around the world
- Can handle paperwork for loans, imports, exports, and other international transactions for you or your client
- Can be a valuable international partner anywhere in the world for you or your clients.