Letters of Credit

Letters of credit provide a written guarantee of creditworthiness. They verify to any third party that the Bank is financially backing your business and guaranteeing payment up to a specified dollar amount. A letter of credit may be used for development projects, contract completion guarantees, and international trading activities.

Documentary Letter of Credit – This is commonly the agreed method of settlement for international trade. It provides both the buyer and the seller the knowledge that payment will be made, and only made, when the documents received strictly comply with the pre-determined terms and conditions of the credit.

Standby Letter of Credit – A Standby Letter of Credit is often used as a backup should the buyer fail to pay as agreed. The letter allows the customer to establish a rapport with the seller by showing that it can fulfill its payment commitments. Standby letters of credit can be used to guarantee the repayment of loans, to ensure fulfillment of a contract, and to secure payment for goods delivered by third parties. The beneficiary can cash it on demand.

For additional information, please contact the Business Services Group at (717) 581-6020.