Letters of Credit

When establishing import/export business relationships, there may be a number of dominant factors to be considered. The letters of credit issued by any bank provide ease and security to the purchaser as well as the seller, contributing to minimize inherent international trade risks..

Import Letter of Credit

A letter of credit is a commitment acquired by the bank, acting on behalf of the importer, to honor payment of the goods or services provided by the seller within a specified time limit and against the documents determined. A letter of credit assures the purchaser that payment will only be made upon presentation of the required documents.

Benefits:

  • Network of correspondents around the world
  • Specialized counseling
  • Service through On-line Banking (Multibank On-line Banking)

Export Letter of Credit

Exporters may face significant risks in international trade, either because of delay or nonpayment of the exported goods. If you are new or have been established as an exporter for a long time, Multibank, Inc., commercial services may help you reduce risks, allowing you to focus on the growth of your export business. To benefit from the export services, you must simply ask your purchasers to issue letters of credit through us.

Benefits:

  • Guaranty of reimbursements
  • Credit risk (payment) is reduced

Shipping Guarantees

At times, your goods may reach port before the shipment documents have been processed through the banking activities system. A Shipping Guarantee issued by us is accepted by all shipping companies at the national level.

Benefits:

  • Allows immediate possession of the goods prior to payment and receipt of the documents
  • Avoids delay in the daily operation of your business
  • Eliminates costly charges for delays or storage
  • Allows postponement of payment until the seller submits the documents

Stand-by Letter of Credit

The Stand-By Letter of Credit may be used for many purposes, including:

  • to cover noncompliance or omission of a contract
  • as a form of guarantee for credit facilities
  • to guarantee an importer’s open account purchases
  • to cover advance payment of a commercial transaction

Letter of Credit (Under the CCC GSM-102 Program)

Commodity Credit Corporation (Commodity Credit Corporation of the USDA)

The U.S. Department of Agriculture (USDA) manages this credit guarantee program to promote the export of commodities from the United States. It provides financing coverage with credit terms ranging from 6 months to 3 years. The short-term credit program is known as GSM-102. This program covers commercial credits granted for financing sales and do not constitute a subsidy or a form of food aid.

In both programs the CCC (Commodity Credit Corporation of the USDA) endorses credits issued by U.S. Banks to foreign Banks, which use irrevocable letters of credit, in U.S. dollars, as form of payment for imported commodities. (1) Letters of credit must be opened in accordance with the importer’s instructions, who, in turn, has the option of negotiating his own credit terms with local Banks, in order to allow them to make deferred payments for the commodities imported from the United States.