Managing Your Commercial Transactions. #2. Coverage under the WCGP requires that the transaction be supported by an irrevocable Letter of Credit issued by a bank acceptable to EXIM. Youre given a line of credit thats available for a set time frame, usually up to 10 years. While an SBLC is just a safety measure and is only encashed if any of the parties fail to honor the agreement, one cannot get an SBLC discounted if there is no default. It comes into action if the buyer is not able to honor the agreement with the seller, the seller goes to the bank and submits the proofs as mentioned in the SBLC. They are as follows: Commercial letter of credit The bank makes direct payment to the beneficiary (seller) on the buyers behalf, Standby letter of credit The bank makes payment to the beneficiary (in this case the buyer) if the holder (seller) cannot, Confirmed letter of credit A confirmed letter of credit is guaranteed by a bank other than the issuing bank. . When a bank issues an LC on behalf of a customer, it authorizes another bank -- known as the advising bank -- to pay a specified amount of money to a named beneficiary. What is Business Identifier Code (BIC) and International Bank Account Number (IBAN)? However, like anything else related to banking, trade, and business there are some pros and cons to acknowledge. Applicable Revolving Commitment Fee Percentage means (a) from the Closing Date until the date of delivery of the Compliance Certificate and the financial statements for the second full Fiscal Quarter after the Closing Date, a percentage, per annum, determined by reference to the following table as if the Leverage Ratio then in effect were 3.00:1.00; and (b) thereafter, a percentage, per annum, determined by reference to the Leverage Ratio in effect from time to time as set forth below: Leverage Ratio Applicable Revolving Commitment Fee Percentage for U.S. The seller's total fees will probably be less, but there will be 5 to 10 different charges, each ranging from $25 to $150, for postage, courier services, bank-to-bank reimbursement charges, authenticating the LC and other services. The Facility Fee Percentage shall be as follows: Range of Borrowers Corporate Credit Rating S&P/Xxxxxx/Fitch Ratings Percentage of Maximum Revolving Credit Commitments