As a small business importer striving to keep ablaze with international trade and your overseas seller requires a Letter of Credit “L/C” to purchase goods, the normal procedure is to approach a bank with an application and the bank will require a Security Deposit or Collateral of same equivalence of the amount of the L/C. The procedure is usually very cumbersome and takes a long time to finalize. Could take up to 4months to issue and goods can be ordered.
Because the L/C is a Credit instrument, the process to open an L/C is intensive and these presents a somewhat barrier to the growth of SME import businesses.
And for small businesses it is difficult to:
1. Provide the funds or landed property required as collateral for the L/C
2. Wait patiently for the period required for the cash or collateral to lay dormant while the order is fulfilled.
How TFC help small business preserve precious capital?
Trade Finance Capital “TFC” & partners, a leading corporate advisory is specialized in arranging Letters of Credit to clients through reputable and trusted affiliates / Top 10 International banks worldwide that have the capability to issue L/Cs backed with their own collateral, not the client’s. TFC will stand in place of the client and manage all the process of opening and issuing of the L/C from start to finish. Meaning the client do not have to sit and wait while their cash is held down, instead they go about their usual business and use the cash for other transactions while TFC handles the L/C process on behalf of the clients.
The client pays a fee upon L/C issuance to use the service provider’s resources, but the fee is much lower than what it would cost to using banks. The client still receives management of the L/C process, and the instrument is transmitted using SWIFT messaging, through respected global financial institutions.
If a client requires up to $50 million worth of goods for expansion, TFC can arrange a letter of credit on their behalf to the exporter seller and the client pays nothing until the goods arrive at the destination point. Instead the cash that would have been used for bank collateral can now be channeled to the business expansion. The client only pays a fraction of the face value of the L/C for essentially borrowing $50 million for a period of 90days from manufacturing to delivery.
From a cost of capital perspective, no bank can compete with that, nor are they set up to do so.
For more information on how obtain a workable Financial Instrument customized for your business, send a request to firstname.lastname@example.org