Accessing loan

ACCESSING LOANS AND CREDIT LINE

Our issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee. Then assign a guarantee to that customer for a set amount of money and over a set period of time. Typically less than two years. The issuing bank will send the guarantee to the borrower’s main bank. The issuing bank then becomes a backer for debts incurred by the borrower up to the guaranteed amount.

Businesses typically use this option for financial backing (particularly those who are desperate to expand operations and/or fund a specific project). These enterprises will have typically exhausted other opportunities to raise financing or obtain a letter of credit from their own bank.

Both bank guarantees and standby letter of credit work to reduce the risk in a business agreement or deal for investor or monetizers. Investor are more likely to agree to the fund your project because they have less liability when a standby letter of credit or bank guarantee is active. These agreements are particularly important and useful in what would otherwise be risky transactions, such as certain real estate and international trade contracts.

Banks thoroughly screen clients interested in one of these documents. After the bank has determined that the applicant is creditworthy and has a reasonable risk, a monetary limit is placed on the agreement. The bank agrees to be obligated up to, but not exceeding, the limit. This protects the bank by providing a specific threshold of risk. {Note: standby Letters of credit ensure a transaction proceeds as planned, while bank guarantees reduce the loss if the transaction doesn't go as planned.}