Full Procedure and Process For BG bank guarantee, standby letter of credit (SBLC/SLOC) & Letters of Credit

Bank Instruments Procedure & Process | Kingrise Finance Limited

Kingrise Finance Limited was incorporated in Hong Kong on 22 September 1999 as a Government Licensed Money Lender with Incorporation No.: 0689078 under the Money Lenders Ordinance (Chapter 163 of the laws of Hong Kong).

We are leading providers of Recourse Loan, Non Recourse Loan, Project Financing and Bank Financial Instruments Specialists such as Standby Letter of Credit Financing, Bank Guarantee Funding, Performance Guarantee, Tender Bond Guarantee, Advance Payment Guarantee, Bank Comfort Letter, BG/CD/BD/BCL/DLC/LOC/SLOC/SBLC etc.

Our bank instruments, BG & SBLC are issued from prime banks such as Barclays Bank London, Standard Chattered Bank, HSBC Hong Kong or any rated AAA bank of your choice. All our financial instruments are Cash-Backed and can be used as collateral to secure funding for projects, Discounting, Monetization and Private Placement Programs (PPP).

Today we will be talking about full Procedures, Process and Payment Structure For bank guarantee, standby letter of credit (SBLC/SLOC) & Letters of Credit so here you go.

First of all, we need to know and understand what is a bank guarantee and what is a standby letter of credit, then we will tell you the difference between these two financial instruments.

So What is a Standby Letter of Credit (SBLC/SLOC)?

A standby letter of credit (SBLC or SLOC) is a guarantee of payment by a bank on behalf of their client. It is a loan of last resort in which the bank fulfills payment obligations by the end of the contract if their client cannot. A standby letter of credit can also be abbreviated SBLC or SLOC.
Now that we know what Standby Letter of Credit (SBLC) means, let us know what the meaning of a bank guarantee is.

What is the Meaning of a Bank Guarantee (BG)?

A bank guarantee is a promise from a bank or a financial institution that if a particular borrower defaults on a loan, the bank will cover the loss.

The bank guarantee signifies a lending institution ensures that the liabilities of a debtor is going to be met. In other words, if the debtor is unsuccessful to settle a debt, the bank will cover it. A bank guarantee allows the customer, or debtor, to acquire goods, purchase equipment or draw down a loan.  

A bank guarantee is used only if the client does not pay its vendor an agreed-upon amount. U.S. credit institutions are forbidden from assuming guarantee obligations, and therefore most international transactions require a standby letter of credit.

It is important to remember that a bank guarantee (bg) is different from a standby letter of credit (sblc). Click Here to read the difference between standby letters of credit and bank guarantee.

Below is the normal procedure for the submission and issuance of a Bank Guarantee or Standby Letter of Credit from Kingrise Finance Limited (KFL)

Step 1:

Application is made to KINGRISE FINANCE LIMITED for opening of a BG/LC//SBLC including but not limited to the following:

1. BG/SBLC application form. (Provided by KINGRISE FINANCE LIMITED upon request)

2. Desired verbiage of BG/SBLC. (If none provided, KINGRISE FINANCE LIMITED will provide its normal BG/SBLC / letter of credit verbiage.

3. SWIFT code and address of beneficiary bank.

4. Know Your Customer (KYC) documents including but not limited to: Passport copy of applicant, proof of address documents such as electricity or water bill, articles of incorporation of applicant company and brief summary, executive summary and/or business plan of underlying transaction.

Step 2:

KINGRISE FINANCE LIMITED reviews all documents presented and evaluates acceptability of documents. KINGRISE FINANCE LIMITED then either approves application or denies and shall inform the applicant of such decision.

Step 3:

KINGRISE FINANCE LIMITED prepares draft of the BG/SBLC as it is comfortable to issue and forwards to client for approval. All drafts shall be in line with rules and regulations governing the issuance of BG/SBLC.

Step 4:

The client approves the draft and:

1. Signs a contract agreeing to the terms and conditions of issuance and issuance charges as negotiated.

2. KINGRISE FINANCE LIMITED issues the invoice for the agreed upon charges.

Step 5:

Client makes payment of charges as per agreed upon payment structure.

1. Client shall provide TT/Wire copy of payment made to KINGRISE FINANCE LIMITED account.

2. KINGRISE FINANCE LIMITED shall confirm to client credit of funds upon receipt of funds to KINGRISE FINANCE LIMITED account.

Step 6:

KINGRISE FINANCE LIMITED uploads draft to SWIFT system and provides copy to applicant for final approval of message. Upon approval given by applicant KINGRISE FINANCE LIMITED then releases the SWIFT to beneficiary bank coordinates.

Step 7:

Copies of released SWIFT are then forwarded to the client via email or hard copy as requested. In case the client is represented by an advisor, then it is forwarded to the advisor only.

Step 8:

Any amendments to BG/SBLC are subject to approval of KINGRISE FINANCE LIMITED.

The following is the procedure for payment schedule. The following are general terms:

1. Fees are paid before the issuance of each SWIFT message. In the case of RWA for a BG/SBLC fees need to be paid before hard copy/email issuance.

2. KINGRISE FINANCE LIMITED does not engage in JV payment structures and will not issue any message for zero monies paid upfront.

3. KINGRISE FINANCE LIMITED will not accept payment via ICBPO.

4. If KINGRISE FINANCE LIMITED fails to deliver the instrument as agreed upon, KINGRISE FINANCE LIMITED shall return the fees paid for that issuance.

5. Fees paid for an RWA and MT799 will be used as credit towards fees to be paid for the MT760.

6. In the case that KINGRISE FINANCE LIMITED successfully delivers RWA/MT799 and client does not go ahead with MT760; fees paid for RWA and MT799 will not be returned.

All fees shall be agreed upon and stated in a formalized contract.

DESCRIPTION OF BUY/PURCHASE BANK INSTRUMENTS (BG/SBLC/SLOC)

1. Instrument:                BG (Bank Guarantee) Standby Letter of Credit (SBLC), cash-backed, 
2. Total Face Value:          Eur/USD 2 Million (Min) to Eur/USD 2 Billion (Max)
3. Issuing Bank:              HSBC Hong Kong, Barclays Bank London, Deutsch Bank AG, Frankfurt  or any AA Rated Bank.
4. Term / Age:                One (1) Year and One (1) day, Fresh Cut
5. Invoice Price:              45% Net and 47% Gross of the face value of each BG/SBLC to the Seller, including 2% consultancy fees as per IMFPA.

6. Consultation Fee:       In total of 2%, which is to be split and paid to the consultants as follows:

                                       1% to …(Seller’s Mandate).., paid by the Seller/Payer-1

                                       1% to ………………………, paid by the Buyer/Payer-2 7. Delivery of instrument:          Bank-To-Bank by SWIFT MT-760, as per the Schedule of Delivery of Buy-Sell Agreement

8. Payment for instruments:                   By SWIFT MT-103 wire transfer
9. Original Hard Copy:                 By bonded courier to Buyer’s designated Depository Bank within Seven (7) bank working days after receipt of BG/SBLC(s) settlement payment by SWIFT MT-103 into the Seller’s account.

Letters of Credit, lease bank guarantee, standby letter of credit providers, bank instrument procedure, Uses of Bank Instruments, How To get bank Instruments, bank instrument procedure, bank instrument process
Letters of Credit, lease bank guarantee, standby letter of credit providers, bank instrument procedure, Uses of Bank Instruments, How To get bank Instruments, bank instrument procedure, bank instrument process

BELOW IS THE DESCRIPTION OF LEASE BANK INSTRUMENTS (BG/SBLC/SLOC) 1. Instrument:               Fully Cash Backed Bank Guarantee {BG} or StandBy Letter of Credit {SBLC}
2. Total Face Value:       USD 2Million (Min) to USD 2 Billion (Max)
3. Issuing Bank:             HSBC Hong Kong, Barclays Bank London or any prime Bank.
4. Age:                        One Year and  One Day (with rolls and extensions where applicable) 
5. Leasing Price:            4%  (+ 2% brokers commission where applicable) 2% broker commission applies to clients that were introduced by brokers
6. Delivery:                   SWIFT MT-760
7. Payment:                  MT103  Wire Transfer
8. Hard Copy:                Bonded Courier within 7 banking days.9. Bank Transmission fee: Depends on the face value of the bank instrument

Uses of Bank Instruments for potential holders or beneficiary
  1. Bank instruments vary in scope and purpose with each bank instrument serving a specific purpose. Bank instruments are very important in international trades, trade finance, important and export transactions and they are widely used by businesses, contractors, importers as well as exporters.
  2. Some financial instruments will act as Collateral or credit enhancement to shore up financial statements and profile.
  3. Loan or funding commitment; demonstrate project, business, venture or program has sufficient merit or cash flow returns to warrant funding and investments.
  4. Some bank instruments like letters of credit helps to facilitate international trade between companies that don’t know each other and have different laws and regulations. 
  5. Proof of funds, bank guarantees, letters of credit; to facilitate, secure or execute projects, trade and business transactions.
  6. Bank instruments like letter of credit (LC), also known as a documentary credit or bankers commercial credit, or letter of undertaking (LoU), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. Letters of credit are used extensively in the financing of international trade, where the reliability of contracting parties cannot be readily and easily determined. Its economic effect is to introduce a bank as an underwriter, where it assumes the counterparty risk of the buyer paying the seller for goods.  The International Chamber of Commerce oversaw the preparation of the first Uniform Customs and Practice fombbr Documentary Credits (UCP) in 1933, creating a voluntary framework for commercial banks to apply to transactions worldwide.
  7. Another bank instrument known as bank guarantee acts similarly to a line of credit, except that a line of credit can be drawn upon at will by the bank’s client. A bank guarantee is used only if the client does not pay its vendor an agreed-upon amount. U.S. credit institutions are forbidden from assuming guarantee obligations, and therefore most international transactions require a standby letter of credit. 
Letters of Credit, lease bank guarantee, standby letter of credit providers, bank instrument procedure, Uses of Bank Instruments, How To get bank Instruments, bank instrument procedure, bank instrument process
How To get bank Instrument (BG, CD, LC, BD, DLC, SBLC, SLOC)

Whenever you need loan, project financing or bank instruments such as bank guarantee, SBLC or Letter of Credit kindly contact Kinggrise Finance Limited because we are the world’s leading provider of bank financial instruments.

We are incorporated in Hong Kong since 22-September 1999 as a Government Licensed Money Lender with Incorporation No.: 0689078 and we have been providing these financial services to our numerous customers all over the world including importers, exporters as well as customers that need credit enhancements or trade finance facilities to execute projects locally or internationally.

Our loan interest rate is just 3% annually and you can get loan financing from us with or without security or collateral. The loan term is up to 30 years with a grace period up to 3 years for those in the construction industry.

Also, you will have the option to choose monthly payments or quarterly payments.

   Why Choose Us?

  • Fast Turnaround
  • Best Top Rated Banks
  • Competitive Low rates
  • No prepayment penalty
  • 2 Days for Commitment
  • Extremely Satisfied Clients
  • WE KEEP OUR PROMISE
  • 20 Years of Experience & Trust
  • No Personal Collateral Required
  • Solutions for every customer & every industry.
  • Loan amounts from $1 million to over $500 million
  • Fast Approvals & Fast Funding- Closing in as little as 5 days

BROKERS: We welcome new brokers who are direct to their clients. New brokers are welcomed and are rewarded with 2% commission on every deal they bring to us. 

Kindly contact Us today for all your funding needs, including business loan, sme Loans, project financing, Lease bg, Lease sblc, Bank Guarantee Provider


Website: www.kingrisefinance.com
Email: info@kingrisefinance.com

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