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Read MorePlatinum Global Bridging Finance
Bridging Loans and Stock Loans
About
Platinum Global Bridging Finance offers Real Estate Debt Finance which is unique and makes us different from other brokers in the types and location of financing we provide. With over 15 successive years in the financial markets we have seen and worked through the last financial crash and seen the re-emergence of old and new finance products so we are sure we can provide our clients with the most up to date financing knowledge. We specialise in providing small, medium and large bridge finance, development finance and commercial finance deals. Our flexible approach is down to our network of banks, non-bank lenders, high net worth investors, investment funds and private bridging partners based in the UK and around the world. Our specialism doesn’t stop with international bridging finance and international commercial property finance as we work with many Debt Funding, Capital Raising and JV Companies based in the UK, Europe and the rest of the world. We help companies raise capital for a variety of sale, expansion and merger uses. We also work with specialist providers of Structured Property Finance, Senior Loans, Mezzanine Finance and Growth Capital. We have financed over £1.5 billion of lending in our established lending locations via our network of over 200 lenders.
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We Offer Global Stock Loans Registered On The Worlds Most Popular Stock Exchanges
What is Stock Loan Lending?
Stock loans or collateral loans lending is the process of loaning a stock or share security to an investor, person or company. Stock loan lending is where the borrower pledges a basket of shares or pledges a stock security that is listed on a major stock exchange anywhere in the world. When a listed security or stock title is loaned the title and the ownership are also transferred to the borrower as they have put up cash which is lent to the financial investor against their exchange listed and trade-able financial securities. This is a big advantage in lending from asset backed lenders.
Understanding Stock Loan Lending
Securities lending is conducted between stock brokers, stock dealers, stock selling institutions and not usually by individual share trading investors. But today times have changed and financial times have developed as there are many individual stock market investors that hold a majority of their savings and wealth in stocks and shares and so require stock loan lending to finance other financial asset purchases at the drop of a hat time-wise. This released capital can be used to finance, property, art purchases, jewellery and even classic and rare cars and vehicles at auction. In short the equity released thats being released by the stock holding client from stock lending providers can be used for any financial purchase as the investor has pledged their stocks and shares as collateral to obtain access to their equity held in their share portfolio. In short otc stock loan lenders are basically asset backed based lenders.
To complete the stock loan, a stock loan lending agreement, known as loan agreement, must be completed. This lays out the terms of the stock loan including term duration, interest rate, lock in period, lender’s fees and the description of the collateral loan. Stock loans are also sometimes called SBL's or securities backed loans.
How Does A Non-Recourse Stock Loan Work?
Non-recourse stock loans are a loan secured against shares in a publicly-traded company to secure the loan financing. It is an easy and efficient way for individuals, institutions, large well capitalized companies and business owners to access the value of their stocks and shares without much fuss and without having to wait too long for the money.
Securities borrowing and lending can be a critical capitalization source for entrepreneurs wanting to use this money to expand their business or to even plug a temporary hole in their cash-flow. A stock loan is a great financial lending resource they can use to gain quick access to fund their business operations from securities lenders.
Stock loan amounts are usually determined by a loan to value (LTV) ratio which means the loan amount may be equal to 60% of the value of the shares needed to secure the loan. The LTV is usually determined by the strength of the stock and by what volume is trading each month. The pledged share must have a minimum trading volume which is is at least 250,000 shares must be traded over an average of 30 days. This enables the stock loan lender to establish how much they will lend the applicant looking to loan money against the shares in their portfolio.
There is a lot of different angles to the stock financing transaction lending criteria, the maximum loan amount available to a borrower can depend depends on factors such as:
The companies or investors ability to convert a portion of the current stock market market value of securities into cash without selling them outright is an extremely attractive option for many shareholders without having to actually give up their shares. With that equity unlocked from their stock portfolio holding, individuals and business owners can access the liquidity they need with ease and without visiting the bank. Banks dont tend to offer stock loans to companies as they would to large institutions and this is where the private institutions step in to fill this gap in the market.
What Are The Benefits of Taking a Stock or Securities Loan?
A stock repurchase agreement is an agreement that is used when stocks are being sold from one person or company to another. The stock purchase agreement states that a company can buy back its stock at a later date. You own a corporation, and want to buy stocks back from a stockholder. A Stock Repurchase Agreement can help make it happen. Or maybe you own stock in a company and want to sell it back. It’s smart to outline the terms first. Getting a Stock Repurchase Agreement signed can help move the process forward. There are many reasons why you might want to re-sell your stocks to a corporation. Maybe it’s a lucrative time for you to re-sell. Maybe you just want to get out of that particular investment. Perhaps you’re a partner in the corporation and want to sell to another partner. Or maybe you are the one who wants to get your stocks back – if the stockholder agrees. Perhaps you’d just like a little more control of the corporation. Regardless of your reasons, how you go about reacquiring the stocks matters. Having a Stock Repurchase Agreement makes re-selling your stocks to a corporation a little easier by clarifying all the terms in writing. Stock repo agreements are similar in a way to securities financing.
What Is A Trade-able Investment Bond?
An investment bond is a financial instrument that works by allowing individuals to loan cash to institutions such as governments or companies. The institution will pay a defined interest rate on the investment for the duration of the bond, and then give the original sum back at the end of the loan’s term. While a bond’s end return is fixed, the market conditions surrounding its sale can cause fluctuations in its price to buy. High interest rates, for example, tend to make bonds less attractive to investors by providing other means of attaining high returns with low risk. For this reason, interest rates and bond prices tend to have an inverse relationship. Investors trade bonds for a number of reasons, with the key two being—profit and protection. Investors can profit by trading bonds to pick up yield (trading up to a higher-yielding bond) or benefit from a credit upgrade (bond price increases following an upgrade). Bonds can be traded for protection, which includes being credit defensive, which involves pulling money from bonds exposed to industries that might struggle in the future. As bonds are trad-able that also means that they can be eligible for an investment bond loan against the value of the bond. The bond loans would primarily be used by banks and financial institutions looking to free up liquidity either for themselves or for their clients. Bonds contain an ISIN, or International Securities Identification Number which uniquely identify the bond and thus gives our lenders the opportunity to see if the bond is worth lending against for the investor or institution holding the bond. A bond loan is very common amongst financial institutions to free up liquidity for other trades or to hedge other transactions they make.
The benefits of securities finance far outweigh the negative aspects because of the liquidity and speed that stock lenders provide by offering a collateral loan to potential stock loan clients. The benefits of securities finance far outweigh the negative aspects because of the liquidity and speed that stock lenders provide by offering a collateral loan to potential stock loan clients. Let’s face it, Liquidity is king. So why would you not put your shares to work? Our loan stock loans are not only fast but they are safe, being that they are non recourse which is so important in this ever changing stock market. Its always advantages for client to be able to access stock loan funding when they are looking for available options when lending stocks. As the direct lender with over a 6 years of stock loan experience we guarantee effective and comprehensive stock loan transaction for you or your business. Our reputation and history of successful transactions and clients speak for themselves. We pride ourselves in helping our clients – large or small, obtain streamlined financing even in today’s economy. We lend on most stock markets. We work with all types of asset based lenders that can provide the best stock loans at the lowest interest rates. Many people ask what are securities in finance? Securities in finance are essential so investors can access the stock market and invest for the longer term while hoping they can make a profit from their stocks rising. Its important to have an investment plan and portfolio risk assessment so that you have a target to aim for.
What Are The Benefits of A Stock Loan?
Re-Cap of Benefits Of A Stock Loan There are a number of key advantages to using funding of an equities related transaction from our stock lenders.
Country Exchange Exchange Abbreviation
Turkey The Borsa Istanbul BIST
United Kingdom London Stock Exchange LSE
Why Work With Platinum Global Stock Loans and Securities Lending
UNPARALLELED PROFESSIONALISM
Our professionalism is formed on a foundation of knowledge gained through our broad international presence and experience developed through our services in global financial markets.
PERFORMANCE AND BENCHMARKS
Our consultants and financial advisors demonstrate a strong performance record in services for our ultra high net worth individuals and institutional clients, but they are
never content to rely on that record. Rather, they have established that record as a benchmark that is to be met and exceeded in all advisory and management services for individuals and corporate entities.
A COMPLETE SLATE OF SERVICES
We provide the highest quality of services under the aegis of a single entity. Our full-service capabilities offer superior coordination of investment advice, execution, reporting, and administration with an optimum fee structure that reduces duplication and service conflicts.
NATIONAL AND INTERNATIONAL NETWORK
Our consultants and advisors maintain relationships with key opinion leaders in both global and private financial institutions in North America, Europe and throughout the countries of Southeast Asia. We have access to worldwide securities lending and worldwide stock loans with banks, family offices, ultra high net worth individuals, private institutions and many more lenders at our disposal.
24/7 – 365 SERVICES AND SUPPORT
Modern global investment markets operate around the clock. Our clients receive continuous support from our consultants and advisors on an everyday and at all times basis to verify timely execution of transactions and administration of services.
CONFIDENTIALITY AND PRIVACY
Our advisors and consultants maintain strict independence that enables them to consider the client’s financial goals above all else. We adhere to the strictest financial and
securities services regulations of professional financial regulatory bodies in the geographic markets and territories that we serve.
OUR INTERNATIONAL AND FINANCIAL NETWORK
Through our participation in multiple global debt and equity transactions, we have forged alliances with many of the top international investment and commercial banks. These alliances give our advisors and consultants access to transactions and expertise that they can then use to deliver superior financial advice and asset management services.
WHAT IS A BANK GUARANTEE? (BG)
A Bank Guarantee (BG) is very similar to a Standby Letter Of Credit SBLC as they both are used for many types of business transactions (financial or performance based). The real difference between the two is that a Letter Of Credit (LC) ensures that a business transaction goes as planned, whereas a Bank Guarantee (BG) reduces losses if a business transaction doesn’t go as planned. A Bank Guarantee (BG) guarantees a certain sum to the beneficiary if the opposing party doesn’t fulfill its specific obligations under their agreed upon contract. Bank Guarantees (BG) ensure both sides in a contractual agreement from credit risk.
HOW DOES THE BANK GUARANTEE (BG) PROCESS WORK?
Bank Guarantee Process
Step 1: Application
Fill out and return the Bank Guarantee (BG) application with the documents for your deal. (Contract, Agreement, etc.) to the bank guarantee lender.
Step 2: Issuing of Draft
A SWIFT MT760 draft of the Bank Guarantee (BG) will be created for you and your beneficiary to review.
Step 3: Draft Review and Opening Payment
a) Finalize the draft between you and your beneficiary and sign off on the draft (changes are free of cost).
b) We issue you a payment invoice for the BG, which you arrange to pay.
c) Once we receive your wire payment, we will release the finalized Bank Guarantee (BG) to the bank for issuance and delivery.
Step 4: Issuance
More often than not, the bank will issue the Bank Guarantee (BG) within 48 hours of release.
Once issued, a copy of the BG will be emailed to you as it is transmitted by a MT760 SWIFT message to the beneficiary, including the reference number of the BG.
Your seller’s bank will be able to receive and confirm the Bank Guarantee Letter (BG) transmission soon thereafter from the bank guarantee lenders offer department.
WHAT ARE TYPES OF BANK GUARANTEES? (BG)
There are a number of different types of bank guarantee and we have listed a number of them below for you?
1. Bid Bond Guarantee:
Is issued as part of the bidding process between a contractor and the project owner, in order to guarantee that the winning bidder will undertake the contract under the term sand conditions that they bid.
2. Performance Bond Guarantee:
A surety bond usually issued by a bank to guarantee the satisfactory completion of a project by a contractor. This is known as a performance bank guarantee.
Also known as a contract bond.
3. Advance Payment Guarantee:
Is utilized whenever a contract includes advance payment to be made to the seller.
It guarantees that this advance payment will be returned to the buyer if the seller happens to not fulfill its obligation to the seller.
4. Warranty Bond Guarantee:
A type of security bond that states that the contractor has a history of trustworthiness.
It also protects the client should the work completed be subpar or unethical in any way.
5. Payment Guarantee:
A financial commitment that requires a debtor to make a repayment due to terms outlined in the debt agreement.
6. Rental Guarantee:
A type of insurance used to protect landlords against loss of rent.
7. Letter of Indemnity:
A letter that guarantees certain contractual provisions will be met or financial reparations will be made.
Guarantees that losses will not be suffered if the contractual provisions aren’t met.
8. Confirmed Payment Order Guarantee:
A guarantee of payment on a certain due date on top of the letter of credit issuing bank’s own commitment to pay the supplier.
Whats The Process
Institutions currently offer a Non-Recourse Loan against a Bank Guarantee (BG/SBLC) stand by letter of credit as collateral with Monetization Programs. The Program allows you to generate Investments Funds which can be used for trade finance, constructions, credit enhancement, government funding, property investment and all round range of funding. Institutions can provide 100% LTV Non-recourse loan with BG Leased Monetization Programs. Find below the transactional procedures and bank transmission charges for the delivery of BG/SBLC monetization programs from BG/SBLC financial institutions.
BG/SBLC PROCEDURE:
1: The Lender shall carry our Financial, Corporate and Due diligence investigations on the Borrower’s company after the successful investigation and confirmation of the authenticity Borrower’s company/ identification by our legal department, the Lender and Borrower execute, sign and initiate this Deed of Agreement, which thereby automatically becomes a full commercial recourse contract to be lodge by both parties initiation of Swift Transmission.
2: Within Three (3) Banking Days after the Legal department has successful verified the authenticity of the Borrower’s document, Our financial department shall send a copy of Letter Of Intent to Complete, Sign and Stamp.
3: Within Two (2) Banking Days after the financial department has received and Confirm the Borrower’s sign and stamp Letter of Intent, Lender will issue a copy of Signed Contract to the Borrower to Complete and stamp then send back Countersigned to the Borrower to complete contract.
4: Within One (1) Banking day after the Lender receives from the Borrower, the Countersigned Contract, The Lender will send a copy of Advance payment guarantee APG or payment refund guarantee PRG that will be duly be signed and stamped by the lender’s bank which guarantees that any delay or default from the Lender side, on Borrower’s first request to our bank any payment made in advance will be refunded along with 1% penalty fees and the signed and seal Payment Invoice. The Borrower will make only 50% payment of the Bank Transmission, Administrative & Handling charges for the Non-Recourse Loan via Swift MT103 by direct wire transfer into the Lender’s provided Banking .
5: Within Three (3) banking days after confirmation of receipt of payment for 50% of the Bank Transmission, Administrative & Handling charges for the Non-Recourse Loan via Swift MT103 in Lender’s nominated bank account, the Lender will deliver Non-Recourse Loan (Cash Loan) via Swift MT103 to the Borrower’s Provided Bank Account.
Borrower sends out leasing fees 5% LTV per annul by Swift MT103 to the Lender’s nominated Bank account with the initially 50% balance of Bank Transmission, Administrative & Handling charges by wire transfer
6: Within Five (5) Banking days upon delivery and confirmation of the Non-Recourse Loan via Swift MT103 in the Borrower’s nominated Bank account
Any unauthorized calls by any party or its representative lawyers to probes or communication in an improper way to bank(s) in this transaction shall be prohibited and contract terminated
The 5% LTV will only be paid for 10 years and after which the Loan becomes Non-Recourse.
NOTE: You are only to pay in advance 50% of the required processing fees in order to complete
and successfully acquire the loan from our financial institution.
Why you Should Choose BG and SBLC Monetization Providers?
1). Guarantee: BG and SBLC monetization providers guarantee the ultimate successful Funding of your Projects. In the case of fail, we return 100% of the swift Fee Paid with 1% penalty fee.
2). Speed: It takes up to 5-10 business days to fund your Project.
3). Reliability: Trust is important for providers. They fund entrepreneurs to run their businesses successfully already since 2012.
4). Experience: Providers experienced professionals will consult you about all the steps that should be done after contacting their Legal Department. They have developed and time-tested approaches for all the operations.
5). No risk: The Advance payment guarantee APG or payment refund guarantee PRG will be duly signed and stamped by the Lender’s bank which means the Fee is 100% secured, providers are helping clients get funded with minimum cost.
6). Insurance: Set up insurance right for you and your business and this helps client insure their projects, even if their projects fails they have no worries as the insurance company covers the Loss.
Leasing a Bank Guarantee is Collateral Transfer
The phrases ‘Lease’ or ‘Leasing’ of Bank Guarantees stem from the way a Collateral Transfer transaction is structured. This guide explains why misleading phrases such as ‘leasing a bank guarantee’ or ‘bank guarantee lease’ – or other form of demand guarantee including a Standby Letter of Credit – has been confused with Collateral
Transfer facilities. So, why do they call it ‘Leasing’ Bank Guarantees? The phrases ‘Lease’ or ‘Leasing’ of Bank Guarantees originate from the basis a Collateral Transfer transaction is structured (as we shall discuss in detail later on this website). The word ‘leasing’ in direct respect to a Bank Guarantee, Standby Letter of Credit or other form of ‘demand guarantee’ is a total misnomer and should really be avoided; although we all accept that people use this layman terminology when referring to finance facilities involving the implementation of bank instruments such as these bespoke funding contracts. As we have discussed, Leasing Bank Guarantees or Leasing Standby Letters of Credit (or other types of Demand Guarantees for that matter) are common mis-phrases associated with Collateral Transfer facilities. Therefore, words such as ‘Lease’, ‘Leasing’ or ‘Rent’ are not really the correct terms to use as it is not possible to actually lease a Bank
What’s in it for the BG/SBLC Applicant?
A large percentage of applicants that apply to receive a Bank Guarantee or SBLC Letter of Credit and Bank Guarantee through a Collateral Transfer facility are doing so with the intention of raising credit or securing loans. It is often the case that applicants do not have sufficient existing security to allow them to borrow the level of funds they require from their own bank or it may be that they have simply extended their credit too far. Sometimes the objective is to raise funds for new start companies, trade positions and large projects. As Collateral injected under Collateral Transfer facilities is worded to support credit facilities, it is possible to use it to secure credit lines and loans, either directly from the Recipient Bank holding the Collateral or another third-party lender. In these events, Our lenders are happy to offer credit line facilities that we can secure and facilitate for
our clients. Collateral Transfer facilities (‘leasing’) may also be used to enhance financial positions, enter trading programs, secure documentary letters of credit, issue contract guarantee, guarantee supplier’s payments and many other uses.
So, why do they call it ‘Leasing’ Bank Guarantees?
The phrases ‘Lease’ or ‘Leasing’ of Bank Guarantees originate from the basis a Collateral Transfer transaction is structured (as we shall discuss in detail later in this series). The word ‘leasing’ in direct respect to a Bank Guarantee, irrevocable Standby Letter of Credit or other form of ‘demand guarantee’ is a total misnomer and should really be avoided; although we all accept that people use this layman terminology when referring to finance facilities involving the implementation of bank instruments such as these bespoke funding contracts. As we have discussed, Leasing Bank Guarantees or Leasing Standby Letters of Credit (or other types of Demand Guarantees for that matter) are common mis-phrases associated with Collateral Transfer facilities. Therefore, words such as ‘Lease’, ‘Leasing’ or ‘Rent’ are not really the correct terms to use as it is not possible to actually lease a Bank Guarantee in the exact meaning of the word ‘lease’. Equally, it is not possible to lease a Standby SBLC Letter of Credit, Documentary Letter of Credit (DLC) or any other form of demand guarantee (as defined by the Uniform Rules for Demand Guarantees Publication (No. 758 – ‘URDG758’).
It is also not possible to buy or purchase Bank Guarantees, Standby Letter of Credit SBLC full form or other forms of demand guarantees (as defined by URDG 758). Likewise, it is not possible to sell them, as we explain later on this webpage.
Hence, the phrase to ‘lease a bank guarantee’ is a misnomer. As we have over 150 years of experience within this industry, we see inexperienced brokers, intermediaries and suspicious entities claiming to be ‘providers’ of these facilities, using this wrong terminology in formal documents. We assume that inexperienced middle-men have grasped these incorrect terms as the Collateral Transfer process mirrors almost exactly that of the process of commercial leasing. In effect, the Provider offers temporary ownership of his assets to the Recipient in return for a fee and at the end of the term the assets revert back to the ownership of the Provider. The
assets are used to raise specific and non-transferable bank indemnities which the Recipient may utilise.
It is therefore a misnomer as in effect no leasing takes place. Through a Collateral Transfer Contract (the underlying agreement to a Collateral Transfer facility), a Provider will agree to place his assets with a facilitating
bank. That bank will be the bank the Provider nominates to issue the Collateral and is referred to as the ‘Issuing Bank’. Typically, that asset being pledged to the Issuing Bank as the underlying substance of the Collateral, will be physical cash or a form of instantly liquid-able stock or commodity such as listed shares or gold bullion or an asset the bank can immediately liquidate.
The Issuing Bank will lien (charge or ‘block’ in their own favour) the asset and will raise a bank indemnity (guarantee) against it in favour of the Recipient (referred to as the Beneficiary in reference to the Bank Guarantee verbiage), in accordance with the instructions of the Provider. The bank indemnity in this case being the Collateral.
As we have learned earlier, this Collateral will commonly take the form of a Banker’s Letter of Guarantee (a Bank Guarantee) issued to the Recipient,specifically for the purpose to which the Collateral Transfer facility refers. Sometimes, the Collateral may be in the form of a Standby Letter of Credit or another form of specific demand guarantee, depending on jurisdiction of the transaction and the parties. It will also be dependent upon its purpose and the specific bespoke terms of the underlying Collateral Transfer Contract or Agreement.
Collateral Transfer facilities are extremely practical when a company or corporation needs to import, enhance or create additional security to support further credit lines or loans. A corporation may seek to introduce secondary or additional ‘collateral’ through these types of facilities to enable it to offer the necessary loan security to their bankers and lenders.
Borrowing funds using a Bank Guarantee or other form of bank indemnity or demand guarantee as security is often referred to as ‘monetizing the guarantee’. One who lends funds against a bank instrument or collateral of this type is often called ‘a Monetizer’. These terms are very much broker speak or slang that one may find surfing the internet. In a professional environment, loans secured against bankable collaterals of this type are traditionally and correctly called ‘Lombard Loans’.
Clients Need This Facility to Secure a Loan
Most of those who seek a ‘Lease Bank Guarantee’ (or standby letter of credit) have the objective to raise hard, physical cash, either by using the Bank Guarantee (BG) as security for a loan or to ‘discount’, ‘monetize’ or ‘credit line’ the Guarantee. Most commonly, those seeking to lease a Bank Guarantee or Standby Letter of Credit (SBLC) are effectively seeking a loan where they have little or no established security (e.g. real estate, bonds or investment deposits) to offer conventional lenders such as their bank or other lending companies. SBLC providers vary and range across a wide range of different lending types and institutions.
Particulars
LOC
BG
Nature
LOC is an obligation accepted by a bank to make payment to a beneficiary if certain services are performed.
BG is an assurance given by the bank to the beneficiary to make the specified payment in case of default by the applicant.
Primary liability
Bank retains the primary liability to make the payment and later collects the same from the customer.
The bank assumes to make the payment only when the customer defaults to make payment.
Payment
Bank makes the payment to the beneficiary as and when it is due. It need not wait for a default to be made by the customer.
Only when the customer defaults the payment to the beneficiary, the bank makes the payment.
Way of working
LOC ensures that the amount will be paid as long as the services are performed as per the agreed terms.
BG assures to compensate for the loss if the applicant does not satisfy the specified conditions.
Number of parties involved
There are multiple parties involved here – LOC Issuing bank, its customer, the beneficiary (third party), and advising bank.
There are only three parties involved – banker, its customer, and the beneficiary (third party).
Suitability
Generally, this is more appropriate during the import and export of goods and services.
Suits any business or personal transactions.
Risk
Bank assumes more risk than the customer.
Customer assumes the primary risk.
We also offer Bridging Finance on UK and European property
https://www.platinumglobalbridgingfinance.co.uk/
What is Stock Loan Lending?
Stock loans or collateral loans lending is the process of loaning a stock or share security to an investor, person or company. Stock loan lending is where the borrower pledges a basket of shares or pledges a stock security that is listed on a major stock exchange anywhere in the world. When a listed security or stock title is loaned the title and the ownership are also transferred to the borrower as they have put up cash which is lent to the financial investor against their exchange listed and trade-able financial securities. This is a big advantage in lending from asset backed lenders.
Understanding Stock Loan Lending
Securities lending is conducted between stock brokers, stock dealers, stock selling institutions and not usually by individual share trading investors. But today times have changed and financial times have developed as there are many individual stock market investors that hold a majority of their savings and wealth in stocks and shares and so require stock loan lending to finance other financial asset purchases at the drop of a hat time-wise. This released capital can be used to finance, property, art purchases, jewellery and even classic and rare cars and vehicles at auction. In short the equity released thats being released by the stock holding client from stock lending providers can be used for any financial purchase as the investor has pledged their stocks and shares as collateral to obtain access to their equity held in their share portfolio. In short otc stock loan lenders are basically asset backed based lenders.
To complete the stock loan, a stock loan lending agreement, known as loan agreement, must be completed. This lays out the terms of the stock loan including term duration, interest rate, lock in period, lender’s fees and the description of the collateral loan. Stock loans are also sometimes called SBL's or securities backed loans.
How Does A Non-Recourse Stock Loan Work?
Non-recourse stock loans are a loan secured against shares in a publicly-traded company to secure the loan financing. It is an easy and efficient way for individuals, institutions, large well capitalized companies and business owners to access the value of their stocks and shares without much fuss and without having to wait too long for the money.
Securities borrowing and lending can be a critical capitalization source for entrepreneurs wanting to use this money to expand their business or to even plug a temporary hole in their cash-flow. A stock loan is a great financial lending resource they can use to gain quick access to fund their business operations from securities lenders.
Stock loan amounts are usually determined by a loan to value (LTV) ratio which means the loan amount may be equal to 60% of the value of the shares needed to secure the loan. The LTV is usually determined by the strength of the stock and by what volume is trading each month. The pledged share must have a minimum trading volume which is is at least 250,000 shares must be traded over an average of 30 days. This enables the stock loan lender to establish how much they will lend the applicant looking to loan money against the shares in their portfolio.
There is a lot of different angles to the stock financing transaction lending criteria, the maximum loan amount available to a borrower can depend depends on factors such as:
- Stock Market conditions.
- Historical shares and stock prices and volume performance.
- Total number of shares owned by the investor or company looking for the loan.
- Market sector sentiment in the current investment climate.
- Stock lending companies individual criteria.
The companies or investors ability to convert a portion of the current stock market market value of securities into cash without selling them outright is an extremely attractive option for many shareholders without having to actually give up their shares. With that equity unlocked from their stock portfolio holding, individuals and business owners can access the liquidity they need with ease and without visiting the bank. Banks dont tend to offer stock loans to companies as they would to large institutions and this is where the private institutions step in to fill this gap in the market.
What Are The Benefits of Taking a Stock or Securities Loan?
- Interest only payment option — No ambiguous or hidden charges; stock loans are an interest-only transparent loan option. There are no never-ending charges that seem to extend the credit unnecessarily.
- Accessible — Stock loans are available to almost anyone but mainly to institutional investors and company owners. You don’t need a credit check to access one for your individual or business needs. The process is painless and straightforward, and your money is delivered to you most conveniently.
- Stock Loan Liquidity — Stock loans are a fantastic easy option when an individual or business owner needs fast stock financing option to release equity. It turns equity into cash with a lot more ease than banks can offer.
- Lender Privacy — It provides borrowers with a trustworthy source of capital and all transactions are private and kept in strict confidence.
- Competitive Pricing— Stock loans offer you competitive and flexible interest rates usually less than 3%. You typically receive better terms than you would get from a traditional bank loan as the lender has your assets to lend against. The lender can liquidate these in the case of a default.
A stock repurchase agreement is an agreement that is used when stocks are being sold from one person or company to another. The stock purchase agreement states that a company can buy back its stock at a later date. You own a corporation, and want to buy stocks back from a stockholder. A Stock Repurchase Agreement can help make it happen. Or maybe you own stock in a company and want to sell it back. It’s smart to outline the terms first. Getting a Stock Repurchase Agreement signed can help move the process forward. There are many reasons why you might want to re-sell your stocks to a corporation. Maybe it’s a lucrative time for you to re-sell. Maybe you just want to get out of that particular investment. Perhaps you’re a partner in the corporation and want to sell to another partner. Or maybe you are the one who wants to get your stocks back – if the stockholder agrees. Perhaps you’d just like a little more control of the corporation. Regardless of your reasons, how you go about reacquiring the stocks matters. Having a Stock Repurchase Agreement makes re-selling your stocks to a corporation a little easier by clarifying all the terms in writing. Stock repo agreements are similar in a way to securities financing.
What Is A Trade-able Investment Bond?
An investment bond is a financial instrument that works by allowing individuals to loan cash to institutions such as governments or companies. The institution will pay a defined interest rate on the investment for the duration of the bond, and then give the original sum back at the end of the loan’s term. While a bond’s end return is fixed, the market conditions surrounding its sale can cause fluctuations in its price to buy. High interest rates, for example, tend to make bonds less attractive to investors by providing other means of attaining high returns with low risk. For this reason, interest rates and bond prices tend to have an inverse relationship. Investors trade bonds for a number of reasons, with the key two being—profit and protection. Investors can profit by trading bonds to pick up yield (trading up to a higher-yielding bond) or benefit from a credit upgrade (bond price increases following an upgrade). Bonds can be traded for protection, which includes being credit defensive, which involves pulling money from bonds exposed to industries that might struggle in the future. As bonds are trad-able that also means that they can be eligible for an investment bond loan against the value of the bond. The bond loans would primarily be used by banks and financial institutions looking to free up liquidity either for themselves or for their clients. Bonds contain an ISIN, or International Securities Identification Number which uniquely identify the bond and thus gives our lenders the opportunity to see if the bond is worth lending against for the investor or institution holding the bond. A bond loan is very common amongst financial institutions to free up liquidity for other trades or to hedge other transactions they make.
The benefits of securities finance far outweigh the negative aspects because of the liquidity and speed that stock lenders provide by offering a collateral loan to potential stock loan clients. The benefits of securities finance far outweigh the negative aspects because of the liquidity and speed that stock lenders provide by offering a collateral loan to potential stock loan clients. Let’s face it, Liquidity is king. So why would you not put your shares to work? Our loan stock loans are not only fast but they are safe, being that they are non recourse which is so important in this ever changing stock market. Its always advantages for client to be able to access stock loan funding when they are looking for available options when lending stocks. As the direct lender with over a 6 years of stock loan experience we guarantee effective and comprehensive stock loan transaction for you or your business. Our reputation and history of successful transactions and clients speak for themselves. We pride ourselves in helping our clients – large or small, obtain streamlined financing even in today’s economy. We lend on most stock markets. We work with all types of asset based lenders that can provide the best stock loans at the lowest interest rates. Many people ask what are securities in finance? Securities in finance are essential so investors can access the stock market and invest for the longer term while hoping they can make a profit from their stocks rising. Its important to have an investment plan and portfolio risk assessment so that you have a target to aim for.
What Are The Benefits of A Stock Loan?
- Liquidity – Stock loans are a fantastic option when an individual or business owner needs a quick financing option. It turns equity into cash with ease.
- Interest-only – No ambiguous or hidden charges; stock loans are an interest-only, transparent loan option. There are no never-ending charges that seem to extend the credit unnecessarily.
- Accessible – Stock loans are available to almost anyone. You don’t need a credit check to access one for your individual or business needs. The process is painless and straightforward, and your money is delivered to you most conveniently.
- Privacy – It provides borrowers with a trustworthy source of capital. All transactions are private and kept in strict confidence.
- Competitive – Global Stock loans offer you competitive and flexible interest rates. You typically receive better terms than you would get from a traditional marginal loan.
Re-Cap of Benefits Of A Stock Loan There are a number of key advantages to using funding of an equities related transaction from our stock lenders.
- Fast transaction & funding
- Non-recourse
- No personal or Corporate guarantee.
- Fast and easy stock loans.
- No credit reporting in the event of a default
- Private & confidential
- Quick closing offering the ideal stock loan solutions.
- Reduce the need for traditional bank recourse financing
- No out-of-pocket expenses or up front fees
- Low interest rates or Maintenance Fees
- Fair share pricing using a three, five day or 30 day average
- Flexible terms
- Large transaction amounts accepted no problem
- Minimum lending USD100,000
- No maximum lending
- Within 24 hours of contacting the stock lender an Agent will contact you to review the stock and eligibility for a loan.
- If approved, they will consult with you to determine a customized solution that works best for you. A non-binding Term Sheet or stock pledge agreement will be sent to you outlining the details of the loan such as loan amount, interest rate, fees and loan term.
- Once the Stock Loan Term Sheet is approved by you a Non-Recourse Stock Master Loan Agreement and Stock Pledge Agreement will be prepared based on the 3–5 day average of your stock’s price and sent to you for review and approval.
- A current stock brokerage statement or share trading statement will be requested as proof of ownership and status of the securities prior to TERM SHEET and funding.
- The loan funds are disbursed either via DVP (Delivery Versus Payment) or wired into your bank account.
- You can make interest-only payments monthly, quarterly or semi-annually. Any dividends from the securities are credited to the loan payment first and any excess is returned to you.
- At the end of the loan term loan if all interest payments are made and the portfolio has maintained the required LTV, the same amount of shares originally pledged are returned to you. The loan term may also be extended or refinanced for an additional term and LTV based upon market conditions.
- The time frame from start to funding may be as little as 7–14 business days.
Country Exchange Exchange Abbreviation
- Athens Athens Stock Exchange ASE
- Australia Australian Securities Exchange ASX
- Canada Canadian National Stock Exchange CNSX
- Canada Toronto Stock Exchange TSX
- European Union EU NYSE Euronext NYX
- Germany Frankfurt Stock Exchange FWB
- Hong Kong Hong Kong Stock Exchange HKEX
- Indonesia Indonesia Stock Exchange IDX
- Japan Tokyo Stock Exchange TSE
- Malaysia Bursa Malaysia KLSE
- Philippines Philippine Stock Exchange PSE
- South Korea Korea Exchange KRX
- Singapore Singapore Exchange SGX
Turkey The Borsa Istanbul BIST
United Kingdom London Stock Exchange LSE
Why Work With Platinum Global Stock Loans and Securities Lending
UNPARALLELED PROFESSIONALISM
Our professionalism is formed on a foundation of knowledge gained through our broad international presence and experience developed through our services in global financial markets.
PERFORMANCE AND BENCHMARKS
Our consultants and financial advisors demonstrate a strong performance record in services for our ultra high net worth individuals and institutional clients, but they are
never content to rely on that record. Rather, they have established that record as a benchmark that is to be met and exceeded in all advisory and management services for individuals and corporate entities.
A COMPLETE SLATE OF SERVICES
We provide the highest quality of services under the aegis of a single entity. Our full-service capabilities offer superior coordination of investment advice, execution, reporting, and administration with an optimum fee structure that reduces duplication and service conflicts.
NATIONAL AND INTERNATIONAL NETWORK
Our consultants and advisors maintain relationships with key opinion leaders in both global and private financial institutions in North America, Europe and throughout the countries of Southeast Asia. We have access to worldwide securities lending and worldwide stock loans with banks, family offices, ultra high net worth individuals, private institutions and many more lenders at our disposal.
24/7 – 365 SERVICES AND SUPPORT
Modern global investment markets operate around the clock. Our clients receive continuous support from our consultants and advisors on an everyday and at all times basis to verify timely execution of transactions and administration of services.
CONFIDENTIALITY AND PRIVACY
Our advisors and consultants maintain strict independence that enables them to consider the client’s financial goals above all else. We adhere to the strictest financial and
securities services regulations of professional financial regulatory bodies in the geographic markets and territories that we serve.
OUR INTERNATIONAL AND FINANCIAL NETWORK
Through our participation in multiple global debt and equity transactions, we have forged alliances with many of the top international investment and commercial banks. These alliances give our advisors and consultants access to transactions and expertise that they can then use to deliver superior financial advice and asset management services.
WHAT IS A BANK GUARANTEE? (BG)
A Bank Guarantee (BG) is very similar to a Standby Letter Of Credit SBLC as they both are used for many types of business transactions (financial or performance based). The real difference between the two is that a Letter Of Credit (LC) ensures that a business transaction goes as planned, whereas a Bank Guarantee (BG) reduces losses if a business transaction doesn’t go as planned. A Bank Guarantee (BG) guarantees a certain sum to the beneficiary if the opposing party doesn’t fulfill its specific obligations under their agreed upon contract. Bank Guarantees (BG) ensure both sides in a contractual agreement from credit risk.
- A construction company and its steel beam supplier may enter into a contractual agreement to build a new complex.
- Both sides might have to issue Bank Guarantees (BG) in order to prove their credit-worthiness to each other.
HOW DOES THE BANK GUARANTEE (BG) PROCESS WORK?
Bank Guarantee Process
Step 1: Application
Fill out and return the Bank Guarantee (BG) application with the documents for your deal. (Contract, Agreement, etc.) to the bank guarantee lender.
Step 2: Issuing of Draft
A SWIFT MT760 draft of the Bank Guarantee (BG) will be created for you and your beneficiary to review.
Step 3: Draft Review and Opening Payment
a) Finalize the draft between you and your beneficiary and sign off on the draft (changes are free of cost).
b) We issue you a payment invoice for the BG, which you arrange to pay.
c) Once we receive your wire payment, we will release the finalized Bank Guarantee (BG) to the bank for issuance and delivery.
Step 4: Issuance
More often than not, the bank will issue the Bank Guarantee (BG) within 48 hours of release.
Once issued, a copy of the BG will be emailed to you as it is transmitted by a MT760 SWIFT message to the beneficiary, including the reference number of the BG.
Your seller’s bank will be able to receive and confirm the Bank Guarantee Letter (BG) transmission soon thereafter from the bank guarantee lenders offer department.
WHAT ARE TYPES OF BANK GUARANTEES? (BG)
There are a number of different types of bank guarantee and we have listed a number of them below for you?
1. Bid Bond Guarantee:
Is issued as part of the bidding process between a contractor and the project owner, in order to guarantee that the winning bidder will undertake the contract under the term sand conditions that they bid.
2. Performance Bond Guarantee:
A surety bond usually issued by a bank to guarantee the satisfactory completion of a project by a contractor. This is known as a performance bank guarantee.
Also known as a contract bond.
3. Advance Payment Guarantee:
Is utilized whenever a contract includes advance payment to be made to the seller.
It guarantees that this advance payment will be returned to the buyer if the seller happens to not fulfill its obligation to the seller.
4. Warranty Bond Guarantee:
A type of security bond that states that the contractor has a history of trustworthiness.
It also protects the client should the work completed be subpar or unethical in any way.
5. Payment Guarantee:
A financial commitment that requires a debtor to make a repayment due to terms outlined in the debt agreement.
6. Rental Guarantee:
A type of insurance used to protect landlords against loss of rent.
7. Letter of Indemnity:
A letter that guarantees certain contractual provisions will be met or financial reparations will be made.
Guarantees that losses will not be suffered if the contractual provisions aren’t met.
8. Confirmed Payment Order Guarantee:
A guarantee of payment on a certain due date on top of the letter of credit issuing bank’s own commitment to pay the supplier.
Whats The Process
Institutions currently offer a Non-Recourse Loan against a Bank Guarantee (BG/SBLC) stand by letter of credit as collateral with Monetization Programs. The Program allows you to generate Investments Funds which can be used for trade finance, constructions, credit enhancement, government funding, property investment and all round range of funding. Institutions can provide 100% LTV Non-recourse loan with BG Leased Monetization Programs. Find below the transactional procedures and bank transmission charges for the delivery of BG/SBLC monetization programs from BG/SBLC financial institutions.
BG/SBLC PROCEDURE:
1: The Lender shall carry our Financial, Corporate and Due diligence investigations on the Borrower’s company after the successful investigation and confirmation of the authenticity Borrower’s company/ identification by our legal department, the Lender and Borrower execute, sign and initiate this Deed of Agreement, which thereby automatically becomes a full commercial recourse contract to be lodge by both parties initiation of Swift Transmission.
2: Within Three (3) Banking Days after the Legal department has successful verified the authenticity of the Borrower’s document, Our financial department shall send a copy of Letter Of Intent to Complete, Sign and Stamp.
3: Within Two (2) Banking Days after the financial department has received and Confirm the Borrower’s sign and stamp Letter of Intent, Lender will issue a copy of Signed Contract to the Borrower to Complete and stamp then send back Countersigned to the Borrower to complete contract.
4: Within One (1) Banking day after the Lender receives from the Borrower, the Countersigned Contract, The Lender will send a copy of Advance payment guarantee APG or payment refund guarantee PRG that will be duly be signed and stamped by the lender’s bank which guarantees that any delay or default from the Lender side, on Borrower’s first request to our bank any payment made in advance will be refunded along with 1% penalty fees and the signed and seal Payment Invoice. The Borrower will make only 50% payment of the Bank Transmission, Administrative & Handling charges for the Non-Recourse Loan via Swift MT103 by direct wire transfer into the Lender’s provided Banking .
5: Within Three (3) banking days after confirmation of receipt of payment for 50% of the Bank Transmission, Administrative & Handling charges for the Non-Recourse Loan via Swift MT103 in Lender’s nominated bank account, the Lender will deliver Non-Recourse Loan (Cash Loan) via Swift MT103 to the Borrower’s Provided Bank Account.
Borrower sends out leasing fees 5% LTV per annul by Swift MT103 to the Lender’s nominated Bank account with the initially 50% balance of Bank Transmission, Administrative & Handling charges by wire transfer
6: Within Five (5) Banking days upon delivery and confirmation of the Non-Recourse Loan via Swift MT103 in the Borrower’s nominated Bank account
Any unauthorized calls by any party or its representative lawyers to probes or communication in an improper way to bank(s) in this transaction shall be prohibited and contract terminated
The 5% LTV will only be paid for 10 years and after which the Loan becomes Non-Recourse.
NOTE: You are only to pay in advance 50% of the required processing fees in order to complete
and successfully acquire the loan from our financial institution.
Why you Should Choose BG and SBLC Monetization Providers?
1). Guarantee: BG and SBLC monetization providers guarantee the ultimate successful Funding of your Projects. In the case of fail, we return 100% of the swift Fee Paid with 1% penalty fee.
2). Speed: It takes up to 5-10 business days to fund your Project.
3). Reliability: Trust is important for providers. They fund entrepreneurs to run their businesses successfully already since 2012.
4). Experience: Providers experienced professionals will consult you about all the steps that should be done after contacting their Legal Department. They have developed and time-tested approaches for all the operations.
5). No risk: The Advance payment guarantee APG or payment refund guarantee PRG will be duly signed and stamped by the Lender’s bank which means the Fee is 100% secured, providers are helping clients get funded with minimum cost.
6). Insurance: Set up insurance right for you and your business and this helps client insure their projects, even if their projects fails they have no worries as the insurance company covers the Loss.
Leasing a Bank Guarantee is Collateral Transfer
The phrases ‘Lease’ or ‘Leasing’ of Bank Guarantees stem from the way a Collateral Transfer transaction is structured. This guide explains why misleading phrases such as ‘leasing a bank guarantee’ or ‘bank guarantee lease’ – or other form of demand guarantee including a Standby Letter of Credit – has been confused with Collateral
Transfer facilities. So, why do they call it ‘Leasing’ Bank Guarantees? The phrases ‘Lease’ or ‘Leasing’ of Bank Guarantees originate from the basis a Collateral Transfer transaction is structured (as we shall discuss in detail later on this website). The word ‘leasing’ in direct respect to a Bank Guarantee, Standby Letter of Credit or other form of ‘demand guarantee’ is a total misnomer and should really be avoided; although we all accept that people use this layman terminology when referring to finance facilities involving the implementation of bank instruments such as these bespoke funding contracts. As we have discussed, Leasing Bank Guarantees or Leasing Standby Letters of Credit (or other types of Demand Guarantees for that matter) are common mis-phrases associated with Collateral Transfer facilities. Therefore, words such as ‘Lease’, ‘Leasing’ or ‘Rent’ are not really the correct terms to use as it is not possible to actually lease a Bank
What’s in it for the BG/SBLC Applicant?
A large percentage of applicants that apply to receive a Bank Guarantee or SBLC Letter of Credit and Bank Guarantee through a Collateral Transfer facility are doing so with the intention of raising credit or securing loans. It is often the case that applicants do not have sufficient existing security to allow them to borrow the level of funds they require from their own bank or it may be that they have simply extended their credit too far. Sometimes the objective is to raise funds for new start companies, trade positions and large projects. As Collateral injected under Collateral Transfer facilities is worded to support credit facilities, it is possible to use it to secure credit lines and loans, either directly from the Recipient Bank holding the Collateral or another third-party lender. In these events, Our lenders are happy to offer credit line facilities that we can secure and facilitate for
our clients. Collateral Transfer facilities (‘leasing’) may also be used to enhance financial positions, enter trading programs, secure documentary letters of credit, issue contract guarantee, guarantee supplier’s payments and many other uses.
So, why do they call it ‘Leasing’ Bank Guarantees?
The phrases ‘Lease’ or ‘Leasing’ of Bank Guarantees originate from the basis a Collateral Transfer transaction is structured (as we shall discuss in detail later in this series). The word ‘leasing’ in direct respect to a Bank Guarantee, irrevocable Standby Letter of Credit or other form of ‘demand guarantee’ is a total misnomer and should really be avoided; although we all accept that people use this layman terminology when referring to finance facilities involving the implementation of bank instruments such as these bespoke funding contracts. As we have discussed, Leasing Bank Guarantees or Leasing Standby Letters of Credit (or other types of Demand Guarantees for that matter) are common mis-phrases associated with Collateral Transfer facilities. Therefore, words such as ‘Lease’, ‘Leasing’ or ‘Rent’ are not really the correct terms to use as it is not possible to actually lease a Bank Guarantee in the exact meaning of the word ‘lease’. Equally, it is not possible to lease a Standby SBLC Letter of Credit, Documentary Letter of Credit (DLC) or any other form of demand guarantee (as defined by the Uniform Rules for Demand Guarantees Publication (No. 758 – ‘URDG758’).
It is also not possible to buy or purchase Bank Guarantees, Standby Letter of Credit SBLC full form or other forms of demand guarantees (as defined by URDG 758). Likewise, it is not possible to sell them, as we explain later on this webpage.
Hence, the phrase to ‘lease a bank guarantee’ is a misnomer. As we have over 150 years of experience within this industry, we see inexperienced brokers, intermediaries and suspicious entities claiming to be ‘providers’ of these facilities, using this wrong terminology in formal documents. We assume that inexperienced middle-men have grasped these incorrect terms as the Collateral Transfer process mirrors almost exactly that of the process of commercial leasing. In effect, the Provider offers temporary ownership of his assets to the Recipient in return for a fee and at the end of the term the assets revert back to the ownership of the Provider. The
assets are used to raise specific and non-transferable bank indemnities which the Recipient may utilise.
It is therefore a misnomer as in effect no leasing takes place. Through a Collateral Transfer Contract (the underlying agreement to a Collateral Transfer facility), a Provider will agree to place his assets with a facilitating
bank. That bank will be the bank the Provider nominates to issue the Collateral and is referred to as the ‘Issuing Bank’. Typically, that asset being pledged to the Issuing Bank as the underlying substance of the Collateral, will be physical cash or a form of instantly liquid-able stock or commodity such as listed shares or gold bullion or an asset the bank can immediately liquidate.
The Issuing Bank will lien (charge or ‘block’ in their own favour) the asset and will raise a bank indemnity (guarantee) against it in favour of the Recipient (referred to as the Beneficiary in reference to the Bank Guarantee verbiage), in accordance with the instructions of the Provider. The bank indemnity in this case being the Collateral.
As we have learned earlier, this Collateral will commonly take the form of a Banker’s Letter of Guarantee (a Bank Guarantee) issued to the Recipient,specifically for the purpose to which the Collateral Transfer facility refers. Sometimes, the Collateral may be in the form of a Standby Letter of Credit or another form of specific demand guarantee, depending on jurisdiction of the transaction and the parties. It will also be dependent upon its purpose and the specific bespoke terms of the underlying Collateral Transfer Contract or Agreement.
Collateral Transfer facilities are extremely practical when a company or corporation needs to import, enhance or create additional security to support further credit lines or loans. A corporation may seek to introduce secondary or additional ‘collateral’ through these types of facilities to enable it to offer the necessary loan security to their bankers and lenders.
Borrowing funds using a Bank Guarantee or other form of bank indemnity or demand guarantee as security is often referred to as ‘monetizing the guarantee’. One who lends funds against a bank instrument or collateral of this type is often called ‘a Monetizer’. These terms are very much broker speak or slang that one may find surfing the internet. In a professional environment, loans secured against bankable collaterals of this type are traditionally and correctly called ‘Lombard Loans’.
Clients Need This Facility to Secure a Loan
Most of those who seek a ‘Lease Bank Guarantee’ (or standby letter of credit) have the objective to raise hard, physical cash, either by using the Bank Guarantee (BG) as security for a loan or to ‘discount’, ‘monetize’ or ‘credit line’ the Guarantee. Most commonly, those seeking to lease a Bank Guarantee or Standby Letter of Credit (SBLC) are effectively seeking a loan where they have little or no established security (e.g. real estate, bonds or investment deposits) to offer conventional lenders such as their bank or other lending companies. SBLC providers vary and range across a wide range of different lending types and institutions.
Particulars
LOC
BG
Nature
LOC is an obligation accepted by a bank to make payment to a beneficiary if certain services are performed.
BG is an assurance given by the bank to the beneficiary to make the specified payment in case of default by the applicant.
Primary liability
Bank retains the primary liability to make the payment and later collects the same from the customer.
The bank assumes to make the payment only when the customer defaults to make payment.
Payment
Bank makes the payment to the beneficiary as and when it is due. It need not wait for a default to be made by the customer.
Only when the customer defaults the payment to the beneficiary, the bank makes the payment.
Way of working
LOC ensures that the amount will be paid as long as the services are performed as per the agreed terms.
BG assures to compensate for the loss if the applicant does not satisfy the specified conditions.
Number of parties involved
There are multiple parties involved here – LOC Issuing bank, its customer, the beneficiary (third party), and advising bank.
There are only three parties involved – banker, its customer, and the beneficiary (third party).
Suitability
Generally, this is more appropriate during the import and export of goods and services.
Suits any business or personal transactions.
Risk
Bank assumes more risk than the customer.
Customer assumes the primary risk.
We also offer Bridging Finance on UK and European property
https://www.platinumglobalbridgingfinance.co.uk/
Services
Contact
- Irlam Road, Urmston, Manchester, UK
