S J GLOBAL TRADE FINANCE
S J Global Trade Finance is our financial facilitation arm which arranges financing for companies through our institutional partners and has been incorporated to offer companies looking for capital, an alternative option to traditional equity or debt investment.
S J Global Trade Finance will do this in four distinctive ways –
- Letter of Credit (LC)
- Standby Letter of Credit
- Safe Keeping Receipt (SKR)
- Bank Guarantee
Looking at each one in turn and how they work –
A letter of credit is a letter from a bank guaranteeing that a buyer’s payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make a payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
The Standby Letter of Credit (SBLC) is an irrevocable documentary commitment, separate from the sales contract, issued by the bank to a third-party beneficiary and promising to pay on behalf of the originator, a specific sum of money against delivery of documents satisfying the terms and conditions of the SBLC.
Safe Keeping Receipt or SKR, is where an asset owner elects to place that asset in the care of an Agent, usually a Bank or a Financial Institution and receives an acknowledgment from the custodian as to their “Safekeeping” of that asset. Funds can be leveraged against the SKR for the benefit of the 3rd Party Business.
A bank guarantee is a type of guarantee from a lending institution. The bank guarantee means a lending institution ensures 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.
For all of the above processes, there is a clearly defined process that is followed and adhered too.
- Non-disclosure and Non-circumvention agreement
- Letter of Interest
- Memorandum of Understanding
The Non-disclosure and Non-circumvention agreement is legally binding and will be signed at the outset, covering both Parties against willful disclosure and Non-circumvention.
The next stage in the process is the Letter of Interest, which will outline the key terms and conditions agreed but is not legally binding. Changes to this can still take place in the next stages and the process can still be cancelled.
The Memorandum of Understanding is not legally binding except the confidentiality clauses and this expands on the Letter of Interest and is sometimes referred to as the Heads of Terms. It is also in effect a draft version of the final agreement.
The Agreement is naturally legally binding and will outline all of the points in the Memorandum of Understanding and includes all of the agreement points, obligations, warranties and timescales.
Where S J Global Trade Finance facilitates any of the funding options which may include incorporating a company overseas SJG charges a fee which is fully disclosed and agreed upon in the transacting supporting documents.