Lore vs. Reality: Why Sourcing A Letter of Credit Provider is Obsolete

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Only Banks Can Offer Letters Of Credit — Right?

Mostly because they were ill-advised about how to actually obtain letters of credit.

In this article we explain in depth why letters of credit are not mail-order instruments:

Those third parties were mostly NBFCs (Non-Banking Financial Companies).

The trend was very popular for almost a decade, until enough ‘’buyers/lessors’’ got burnt financially and accepted the reality, which is that all of those NBFC’s letters of credits were nothing but a SWIFT message backed by thin air.

Misinformation spreads like wildfire.

Why No One Should Still Seek A Letter Of Credit Provider In 2022

Yes, it’s possible to purchase debt from a financial institution, but this is not the same as purchasing or leasing an actual letter of credit. Fraudsters like to use this type of nuance to confuse unsuspecting victims.

Before obtaining a letter of credit your business will require collateral.

Especially if you’re looking for a standby letter of credit.

If your business does not have enough collateral, you will have to raise funding.

Obviously both the bank and investors will have certain criteria, which your business has to meet before you secure funding.

After funding has been secured, you can now walk into any commercial bank, deposit your collateral, submit your transaction documents and request a letter of credit. It’s as simple as that.

The letter of credit will be issued to the beneficiary of your choice if the bank agrees to work with you.

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