Archive for the ‘Credit’ Category
SBLC Financing – How to get SBLC to finance project
May 30th, 2010 | 
Author: Stand By Letter of Credit (SBLC)/Bank Guarantee (BG) Program
(SBLC Financing)
A Stand-By Letter of Credit (SBLC) is an assurance that your company has the financial resources to perform as agreed under contract. The issuing Bank essentially substitutes its credit standing for that of your company in order to facilitate the contract. Stand-By letters of Credit are legal documents that support contractual agreements between two parties. The standbys are concerned only with the contractual agreement you have made with another party and are payable only when the appropriate documentation as outlined in the letter of credit is presented by the beneficiary. If the customer defaults, the beneficiary may draw funds against the letter of credit as penalties or as payments, whichever the terms of the credit provide.
STAND-BY LETTER OF CREDIT PROGRAM SUMMARY
REAL PROPERTY STAND-BY LETTER OF CREDIT FINANCING PROGRAM
- Purchase of Standby Letter of Credit (SBLC), generally at a $20,000,000 face value. SBLC has a term of one year plus one day (see below for SBLC Purchase Program features).
- Transfer SBLC to Lender, together with 15 yr interest only Note, interest rate of LIBOR +2%.
- Lender funds 95% of face value of SBLC ($19,000,000), less 10% of face value in fees (all fees included), so borrower receives 85% of face value of SBLC.
Clients can use Stand-by Letters of Credit for many reasons such as:
- Leverage Funding for Large Commercial Projects
- Funding a Trading Platform
- Credit Enhancement
- Blocked Funds
- Qualify for Financing
- Net Worth Requirements
- Providing Evidence of Proof of Funds
- Commodities / Petroleum Transactions
- To provide assurances of our Client’s ability to perform under the terms of a contract
- To fulfill bid-bond and performance-bond requirements
- To help secure third-party financing
General terms and conditions:
SBLC 85% funded amount must be paid in one year and one day. May be extended up to a total of five years at a cost of 8% for second year, 6% for third year, 4% for fourth year or 2% for fifth year.
Needs List and Procedures:
First Capital Funding Corporation utilizes these SBLC instruments to collateralize commercial property loans.
Letter of Credit Request Procedure:
A request for a Letter of Credit is made from a client directly or may be referred to FCFC. FCFC requires all the documentation and information indicated below.
FCFC will issue a Letter of Engagement to the client, which discloses the points associated with this transaction, which is separate from the Lenders fees. The fee is generally 2 points. Once the letter of Engagement is executed (signed) and returned to FCFC, FCFC will proceed with the request. (Up to this point no monies have been collected unless indicated on Letter of Engagement.
Information Required for an SBLC Request:
- Executive Summary describing project and use of funds.
- Proof of Funds for SBLC request: (need to see a minimum of 10% of SBLC request)
- Bank Statement (recent within 30 days)
- Bank Letterhead indicating the account holder, account number and amount in that account that is available and accessible funds for our client (an escrow letter alone is not sufficient.)
- In the event there are silent partners/ investors that are not principals, proof of funds from them may be used as long as a paper trail evidencing that the principals have access and is permissible to use these funds for the specific transaction. This must be noted in writing from the account holder.
Proof of Funds for commitment fee for lender: (need to see where the commitment fee is coming from if different than proof of funds for SBLC)
- Bank Statement (recent within 30 days)
- Bank Letterhead indicating the account older, account number and amount in that account that is available and accessible funds for our client (an escrow letter alone is not sufficient)
- Corporate ID (Articles of Incorporation or Articles of Organization indicating principals along with Corporate ID#)
- Drivers License (for all principals)
- Passports for International deals (for all principals)
- Name of Corporation, Address, Phone#, Fax#, and email address along with names of all principals indicating the main contact person.
- Referral Name, Address, Phone#, Fax#, and email address
- Sources and Uses (to indicate the breakout)
Note: In the event you have multiple LC requests, they should be sent independently. Executive Summaries will differ.
Once the above documentation has been received it will be forwarded to the SBLC provider. The SBLC provider will then process the request and issue an SBLC draft and send to FCFC within 3-5 business days depending on the complexity of the request and documentation received.
When FCFC receives the SBLC draft, we then will forward a copy to the lender along with the above noted documents (as indicated above required docs for SBLC)
Lender will notify FCFC of their decision, and if approved a commitment letter will be generated and forwarded to FCFC to forward onto the client. All terms and conditions of the loan along with the amount of the commitment fee will be outlined in the commitment letter. The dollar amount of the commitment fee will depend on the loan amount. The commitment fee will be required at the time the borrower signs the commitment letter. The Lender’s bank wiring instructions will be included.
The commitment letter will be signed by the client and returned to FCFC who will then forward the information to the lender.
Commitment fees outline in the commitment letter will be wired to the designated account simultaneously with the commitment letter.
Once the signed commitment fee is received by the Lender, the Lender will issue a letter outlining all bank and swift information which confirms their receipt of the commitment letter and a commitment fee. This letter will be sent within 3-5 business days (original) via DHL/FedEx and also faxed the day issued.
Once the letter is received, the SBLC issuer is notified to swift the collateral (the Official SBLC) they then will fund via SWIFT within 3-5 business days. The Stand-by Letter of Credit Program process above is a general rule and will vary depending on the transaction.
Non-Leased Cash backed SBLC or BG
There are instances when a client requires a non-leased cash backed Bank Guarantee or SBLC to be able to borrow against it at higher levels. We can provide that in amounts of 10 MM to 10 Billion. Make sure you mention this particular instrument when you call or contact us.
This process is excellent, because:
- You have real instrument, it is not a leased one
- Do not require to have the instrument fees in a bank account, they are simply deducted from the requested amount
- Your bank will be the beneficiary
- You can use the instrument as credit enhancement
- This is a third party transaction, therefore you can tell your bank what to do, not the other way round
After all parties have signed the “hard” contracts the bank of the investor will talk to your bank. They can arrange for a MT199 (stating that the investor bank is RWA to send) Only after that your bank prepares the MT103/23 (not sending it) Then the bank to bank negotiation starts with MT799 and MT760.
From start to finish this process takes about 3 weeks.
* IMPORTANT: You will be checked out thoroughly so make sure that you are “real” and able to pay for the fees before applying. And they only work with A and AA rated banks.
The fees on this program are higher than the leased SBLC/BG however, you can obtain the desired instrument without any cash, only a viable project and A and AA rated bank
.
Note: All Accounts require strict compliance with International. Money Laundering Regulations and the US Patriot Act.
Posted in Banking, Business, Credit, Finance, Loans, Real Estate, Trade Finance | 
Tags: Bank Guarantee, Bank Guarantee Cashing Out, Bid Bond, Commercial Projects, Contractual Agreement, Contractual Agreements, Credit Enhancement, Face Value, Financial Resources, Financing Program, General Terms And Conditions, Issuing Bank, Legal Documents, Letter Of Credit, Letter of Credit (commercial), Letter of Credit (standby), Letters Of Credit, Libor, Non-Leased Cash backed SBLC, Performance Bond Requirements, Program Features, Proof Of Funds, Sblc, sblc financing, sblc funding, stand by letter of credit, Stand by letters of credit, Stand-By Letter of Credit. letters of credit, Standby Letter Of Credit, standby letter of credit financing, standby letters credit explained, Trading Platform | 
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Medical Accounts Receivable Financing-stat!
One of the greatest challenges for medical professionals is managing their accounts receivable. Medical accounts receivable typically are the largest asset on their balance sheet. It typically takes 60 to 120 days or more to collect medical accounts receivable because of the long reimbursement process from third party payors, such as Medicare, Medicaid, and commercial insurance companies. The collection process is long and complex. Disputes regarding payment amounts are common. Medical accounts receivable financing accelerates cash flow to pay for expenses such as payroll, malpractice insurance, rent, inventory and advertising.
What are the types of medical professionals that may qualify for medical accounts receivable financing? The following is a partial list: hospitals, medical centers, rehabilitation centers, medical laboratories, surgical centers, sports medicine centers, MRI imaging centers, physical therapy centers, substance abuse clinics, physical therapy centers, manufacturers and/or distributors of medical devices, and physician’s practices whether general or specialized from A to Z such as anesthesiologists, gastroenterologists, obstetricians, and Zygote – Morula Specialists.
How lengthy is the process to obtain medical accounts receivable? It generally takes four to eight weeks to obtain funding because of the unique issues presented. The commercial finance company must perform extensive audits and analysis of the prospective client’s financial situation. They need to determine that the business is and will be a “going concern”. They need to examine billing practices which often are outsourced. This may require a separate audit of a third party. And they need to examine the forseeability of collection of the outstanding accounts receivable by auditing the accounts receivable aging reports from a historical collection perspective. In other words, how much of the amounts owed will be collection losses? How much will actually be collected?
What are other unique issues regarding medical accounts receivable financing? There are potential bankruptcy issues, lien priority issues and the “big bad wolf” issue: after a commercial finance company has purchased medical accounts receivable, the federal government can assert lien priority on the assets of a bankrupt medical company. One example of this is the case of American Investment Financial (“AFI”) versus the US also known as the internal revenue service.
AFI loaned over $800,000 to a pediatric and urgent care clinic. The clinic defaulted on their financial obligations to AFI and also defaulted on their tax obligations to the federal government. It was undisputed that AFI had followed the rules correctly in terms of filing their liens and perfecting their security interests. Nevertheless, the court held that pursuant to Federal law, after a 45 day statutory safe harbor period had passed, the government’s lien took priority. AFI lost hundreds of thousands of dollars because of federal tax law and IRS regulations. It is no wonder that commercial finance companies look very carefully before they purchase medical accounts receivable.
Commercial finance companies will generally advance an amount equal to 70% to 80% of a borrowing base, which may be called “the aggregate amount of eligible accounts”, “net realized value” or “net expected collections”. You can expect the following items to be excluded from your borrowing base: accounts which are subject to dispute, counterclaim or setoff; accounts of any account debtor who has filed or has filed against it a petition in bankruptcy; accounts owed directly by patients or customers.
The bottom line: medical accounts receivable financing, or medical factoring, is more difficult to obtain than other types of factoring because of the legal risks and business risks faced by the lenders. The process to obtain medical accounts financing usually takes much longer than accounts receivable financing for other industries, such as a manufacturer. This good news is, once the credit facility is established, funding can take place in a day or less from your request for financing. You can have medical accounts receivable financing “stat”!
Copyright © Gregg Financial Services
www.greggfinancialservices.com
Posted in Credit |
Tags: Accounts Receivable Financing, Commercial Finance Company, Commercial Insurance Companies, Extreme Urgency, Hospital Emergency Room, Latin Word, Library Of Medicine, Malpractice Insurance, Medical Accounts, Medical Business, Medical Laboratories, Medical Situation, Medicare Medicaid, Medicine Centers, Medline, Mri Imaging, National Institutes Of Health, National Library Of Medicine, Rehabilitation Centers, Sports Medicine |
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Medical Accounts Receivable Financing-stat!
According to the U.S National Library of Medicine and the National Institutes of Health Medline dictionary the word “stat is an adverb for the latin word: STATIM. Statim is an adverb that means immediately or without delay. When a persons arrives at the hospital emergency room with a gunshot wound, the staff might say, “We need to get this patient to surgery stat!” meaning immediately, now. In a medical situation “stat” connotes extreme urgency. Does your medical business need to accelerate cash flow with accounts receivable financing “stat”?
One of the greatest challenges for medical professionals is managing their accounts receivable. Medical accounts receivable typically are the largest asset on their balance sheet. It typically takes 60 to 120 days or more to collect medical accounts receivable because of the long reimbursement process from third party payors, such as Medicare, Medicaid, and commercial insurance companies. The collection process is long and complex. Disputes regarding payment amounts are common. Medical accounts receivable financing accelerates cash flow to pay for expenses such as payroll, malpractice insurance, rent, inventory and advertising.
What are the types of medical professionals that may qualify for medical accounts receivable financing? The following is a partial list: hospitals, medical centers, rehabilitation centers, medical laboratories, surgical centers, sports medicine centers, MRI imaging centers, physical therapy centers, substance abuse clinics, physical therapy centers, manufacturers and/or distributors of medical devices, and physician’s practices whether general or specialized from A to Z such as anesthesiologists, gastroenterologists, obstetricians, and Zygote – Morula Specialists.
How lengthy is the process to obtain medical accounts receivable? It generally takes four to eight weeks to obtain funding because of the unique issues presented. The commercial finance company must perform extensive audits and analysis of the prospective client’s financial situation. They need to determine that the business is and will be a “going concern”. They need to examine billing practices which often are outsourced. This may require a separate audit of a third party. And they need to examine the forseeability of collection of the outstanding accounts receivable by auditing the accounts receivable aging reports from a historical collection perspective. In other words, how much of the amounts owed will be collection losses? How much will actually be collected?
What are other unique issues regarding medical accounts receivable financing? There are potential bankruptcy issues, lien priority issues and the “big bad wolf” issue: after a commercial finance company has purchased medical accounts receivable, the federal government can assert lien priority on the assets of a bankrupt medical company. One example of this is the case of American Investment Financial (“AFI”) versus the US also known as the internal revenue service.
AFI loaned over $800,000 to a pediatric and urgent care clinic. The clinic defaulted on their financial obligations to AFI and also defaulted on their tax obligations to the federal government. It was undisputed that AFI had followed the rules correctly in terms of filing their liens and perfecting their security interests. Nevertheless, the court held that pursuant to Federal law, after a 45 day statutory safe harbor period had passed, the government’s lien took priority. AFI lost hundreds of thousands of dollars because of federal tax law and IRS regulations. It is no wonder that commercial finance companies look very carefully before they purchase medical accounts receivable.
Commercial finance companies will generally advance an amount equal to 70% to 80% of a borrowing base, which may be called “the aggregate amount of eligible accounts”, “net realized value” or “net expected collections”. You can expect the following items to be excluded from your borrowing base: accounts which are subject to dispute, counterclaim or setoff; accounts of any account debtor who has filed or has filed against it a petition in bankruptcy; accounts owed directly by patients or customers.
The bottom line: medical accounts receivable financing, or medical factoring, is more difficult to obtain than other types of factoring because of the legal risks and business risks faced by the lenders. The process to obtain medical accounts financing usually takes much longer than accounts receivable financing for other industries, such as a manufacturer. This good news is, once the credit facility is established, funding can take place in a day or less from your request for financing. You can have medical accounts receivable financing “stat”!
Copyright © Gregg Financial Services
www.greggfinancialservices.com
Posted in Credit |
Tags: Accounts Receivable Financing, Library Of Medicine, Medicare Medicaid |
No Comments »
