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Hypothecation in Real Estate

Hypothecation in real estate enables one form of secured loans. It occurs when a borrower puts an asset as collateral with the lender to secure a loan. As the loan is backed by collateral, it is one form of secured loan. Hypothecation offers certain benefits to both...

Back to Back Letter of Credit

It is the form of documentary credit where the first party uses a letter of credit to secure another Letter of Credit facility. It uses two letters of credit for one financial transaction. The sellers use this option to secure a credit facility by pledging the credit...

Letter of Credit Discounting

Letters of credit facilitate international trades between unknown parties. An LC reduces the trust deficit between the seller and buyer. However, the clearance of funds with documentary credit often takes a long time. The sellers use the discounting of LC in their...

Standby Letter of Credit – SBLC

A standby Letter of Credit (SBLC) works as an additional guarantee or cover in a trade agreement. It is a form of documentary credit where the bank becomes a guarantor to the seller for the payment. It differs from a standard letter of credit in the sense that it is...

Transferrable Letter of Credit

A transferable letter of credit provides the option of transferring the credit to a second beneficiary. The first beneficiary of a letter of credit is the seller (exporter). A transferrable LC allows the transfer of approved credit partially or in full to another...

What is Cash Credit? Short Term Financing Sources

Cash credit is a short-term financing source for businesses. It works similarly to an overdraft bank facility. It is an important financing source for businesses in managing the working capital requirements. Unlike an overdraft, a cash credit facility requires...

Sources of Equity Financing

Equity means a stake, ownership, or ownership rights in a business. Commonly, it is used synonymously as shares. Not all businesses can afford the listing of the company on stock markets. Yet, there are several options that small businesses can utilize to secure...

Sources of Debt Financing

In layman’s terms debt financing means borrowed money. Lenders and creditors earn interest by lending money to the borrowers. The essential use of debt financing is providing financing to the business or individual. However, the implications of debt financing are...

Deferred Payment Letter of Credit

A deferred payment, usance, or time letter of credit is a time-bound form of a letter of credit. It works similarly to other LCs apart that it can releases funds after a specified time. It offers another flexible payment option for international buyers and sellers....