Frequently Asked Questions
What Does Standby Letter of Credit - SLOC Mean?
A guarantee of payment issued by a bank on behalf of a client that is used as "payment of last resort" should the client fail to fulfil a contractual commitment with a third party. Standby letters of credit are created as a sign of good faith in business transactions, and are proof of a buyer's credit quality and repayment abilities. The bank issuing the SLOC will perform brief underwriting duties to ensure the credit quality of the party seeking the letter of credit, then send notification to the bank of the party requesting the letter of credit (typically a seller or creditor).
What Does Bank Guarantee Mean?
A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. A bank guarantee enables the customer (debtor) to acquire goods, buy equipment, or draw down loans, and thereby expand business activity.
What Does Proof Of Funds - POF Mean?
A document that demonstrates that a person has the ability and funds available to use for a transaction. It usually comes in the form of a bank security or custody statement. The purpose of the document is to ensure that the funds required for the transaction are obtainable and legitimate.