Letters of Credit (LOC)
When embarking upon a new business relationship or a very large purchase transaction, there are usually formalities involved. As a bank that works hard to understand our customers, we are here to provide the accreditation you need to start off on solid ground.
Rather than procure a company performance bond from your insurance company, a VSB Letter of Credit can be used to back your value or to guarantee a particular service.
- Provides guarantee on payments of large purchases or contractual agreements to third parties
- Helpful when embarking upon new business relationships
- Can also be used to guarantee a service
- Terms are set by third party
- Principal generally due on demand
- No principal balance exists unless payment is required under the terms and conditions of the letter
- Can replace need for insurance company performance bond
- Fee is based on face value amount
- Interest accrues only if beneficiary requests an advance