Apply for Commercial Loans| Cin Belgium Limited (CMLL): Banks, credit unions and other lending institutions have separate departments that handle commercial loans and residential loans. Individuals who desire to begin the application process for commercial business loans must be prepared to provide specific documents relating to the business, including two or three years of tax returns, financial statements, accounts receivable and accounts payable documents and collateral offered to secure the loan. Business owners should be prepared to give a brief presentation regarding the goals and objectives of the business as well as an outline of the business plan in general. The purpose of the business loan helps loan officers determine which types of loans will be offered.

Purpose of Business Loans

Commercial business loans are used as working capital, to buy real estate in connection with the business or to purchase inventory and equipment. Revolving lines of credit are often used to provide cash for the business over time, since the borrower can withdraw funds from the credit balance of the loan. Term loans are typically used to establish a business, purchase real estate and purchase inventory and equipment.

Letters of Credit

Documentary and stand-by letters of credit are arrangements often used by import/export business, contractors and travel agencies to serve as assurance of payment. Documentary letters of credit are usually for less than six months. A stand-by letter of credit may be renewed annually. A letter of credit serves as a guarantee that the vendor you’re working with will get paid. You apply to your bank or credit union for a letter of credit using cash, real estate or other business assets as collateral. Once you’re approved, your lender will draw up an official letter of credit with a specific dollar amount guaranteed to a specific vendor. If you are unable to pay that vendor, your lender is obligated to do so, and will use your collateral to cover the amount.

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There are various benefits of Bank Guarantee (BG)

Benefits of a Bank Guarantee includes

1. A Bank Guarantee enables companies to make purchases that they would otherwise not be able to make, this guarantees thus serves to heighten business activity and expand enterprenural activity.
2. All the money is not tied up in one project but can be spread around into other projects.
3. There is cash available to explore and expand business.

Categories Of Bank Guarantees.

There are two categories of bank guarantees in general

1. Direct Bank Guarantee: this is a guarantee which is issued by the bank of the account holder directly in form of the beneficiary.
2. Indirect Guarantee is a guarantee which is issued by a second bank in return for a counter guarantee.         For more on Bank Guarantee, click this link www.cmloanslimited.com or send us an email on info@cmloanslimited.com

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EURO-MTNS

MTNs have become a major source of financing in international financial markets, particularly in the Euro-market. Like Euro-bonds, Euro-MTNs are not subject to national regulations, such as registration requirements. Although Euro-MTNs and Euro-bonds can be sold throughout the world, the major underwriters and dealers are located in London, where most offerings are distributed.

Although the first Euro-MTN program was established in 1986, the market represented a minor source of financing throughout the 1980s. In the 1990s, the Euro-MTN market has grown at a phenomenal rate, with outstandings increasing from less than $10 billion in early 1990 to $68 billion in May 1993 (chart 5). New borrowers account for most of this growth, as a majority of the 190 entities that have established Euro-MTN programs did so in the 1990s. As in the U.S. market, flexibility is the driving force behind the rapid growth of the Euro-MTN market. Under a single documentation framework, an issuer with a Euro-MTN program has great flexibility in the size, currency denomination, and structure of offerings. Furthermore, reverse inquiry gives issuers of Euro-MTNs the opportunity to reduce funding costs by responding to investor preferences.

The characteristics of Euro-MTNs are similar, but not identical, to MTNs issued in the U.S. market. In both markets, most MTNs are issued with investment-grade credit ratings, but the ratings on Euro-MTNs tend to be higher. In 1992, for example, 68 percent of Euro-MTNs had Aaa or Aa ratings, compared with 13 percent of U.S. corporate MTNs. In both markets, most offerings have maturities of one to five years. However, offerings with maturities longer than ten years account for a smaller percentage of the Euro-market than of the U.S. market. In both markets, dealers have committed to provide liquidity in the secondary market, but by most accounts the Euro-market is less liquid.

In many ways, the Euro-MTN market is more diverse than the U.S. market. For example, the range of currency denominations of Euro-MTNs is broader, as would be expected. The Euro-market also accommodates a broader cross-section of borrowers, both in terms of the country of origin and the type of borrower, which includes sovereign countries, supranational institutions, financial institutions, and industrial companies. Similarly, Euro-MTNs have a more diverse investor base, but the market is not as deep as the U.S. market.

In several respects, the evolution of the Euro-MTN market has paralleled that of the U.S. market. Two of the more important developments have been the growth of structured Euro-MTNs and the emergence of large, discrete offerings. Structured transactions represent 50 percent to 60 percent of EURO-MTN issues, compared with 20 percent to 30 percent in the U.S. market. In the Euro-MTN market, many of the structured transactions involve a currency swap in which the borrower issues an MTN that pays interest and principal in one currency and simultaneously agrees to a swap contract that transforms required cash flows to another currency. Most structured Euro-MTNs arise from investor demand for debt instruments that are otherwise unavailable in the public markets. To be able to respond to investor driven structured transactions, issuers typically build flexibility into their Euro-MTN programs. Most programs allow for issuance of MTNs with unusual interest payments in a broad spectrum of currencies and with a variety of options.

Large, discrete offerings of Euro-MTNs first appeared in 1991, and about forty of these offerings occurred in 1992. They are similar to Euro-bonds in that they are underwritten and are often syndicated using the fixed-price reoffering method. As a result of this development, the distinction between Euro-bonds and Euro-MTNs has blurred, just as the distinctions between corporate bonds and MTNs has blurred in the U.S. market.

The easing of regulatory restrictions by foreign central banks has played an important role in the growth of the Euro-MTN market. For example, over the past year MTNs denominated in deutsche marks have emerged as a major sector in the Euro-market as a result of regulatory changes made by the Bundesbank in August 1992. Under the previous rules, foreign borrowers could only issue debt denominated in deutsche marks through German subsidiaries or other German financial firms, and maturities could not be shorter than two years. Debt denominated in deutsche marks also had to be listed on a German exchange, and these offerings were subject to German law, clearing, and payment procedures. These rules effectively precluded issuers from establishing multicurrency Euro-MTN programs with a deutsche mark option.

In the August 1992 deregulation, the Bundesbank removed the minimum maturity requirement on debt denominated in deutsche marks issued by foreign nonbanks, and it eliminated or simplified issuance procedures for all issuers. Although the new rules require that a “German bank” act as an arranger or dealer, the definition is broad enough to include German branches and subsidiaries of foreign banks. The arranger is required to notify the Bundesbank monthly of the volume and frequency of issues denominated in deutsche marks. As a result of the Bundesbank’s deregulation, from 1991 to 1992, the share of Euro-MTN offerings denominated in deutsche marks increased from 1.4 percent to 4.8 percent, while the volume of issuance in deutsche marks rose from $268 million to $1.69 billion. Other central banks have instituted similar liberalizations that may result in rapid growth of MTNs denominated in other currencies, such as the Swiss franc and the French franc.

OUTLOOK FOR THE MTN MARKET

Few innovations in finance have been as successful as the medium-term note. Its success derives from its remarkable adaptability to the needs of both borrowers and investors. The success can be measured by the number of borrowers, the diversity of note structures, and the amount of outstanding MTNs, all of which have increased dramatically over the past decade.

The adoption of SEC Rule 415 in 1982 was the key event that removed the regulatory impediments to continuous offerings of corporate notes. Other regulatory changes, such as SEC Rule 144A and liberalizations by European central banks, have been instrumental in the development of new sectors in the MTN market. As a result of these regulatory changes, financial markets have become more efficient. In 1992, the SEC eased restrictions on the types of securities eligible for shelf registration. As a result of this ruling, asset-backed MTNs may emerge as the next major growth sector in the public MTN market.

The Federal Reserve Board conducts a survey of borrowing by U.S. corporations in the public MTN market, the largest sector of the worldwide market. The Federal Reserve collects these data to improve its estimates of new securities issues of U.S. corporations, as published in the Federal Reserve Bulletin, and to improve estimates of corporate securities outstanding, as shown in the flow of funds accounts. Material in this and the next two sections was originally presented in “Corporate Medium-Term Notes,” Leland Crabbe, The Continental Bank Journal of Applied Corporate Finance, vol. 4 (Winter 1992), pp. 90-102. For example, MTNs have been callable, putable, and extendible; they have had zero coupons, step-down or step-up coupons, or inverse floating rates; and they have been foreign currency denominated or indexed, and commodity indexed. The most common indexes for floating-rate MTNs are the following: the London interbank offered rate (LIBOR), commercial paper, Treasury bills, federal funds, and the prime rate. MTN programs typically give the issuer the option of making floating-rate interest payments monthly, quarterly, or semiannually. SEC-registered MTNs have the broadest market because they have no resale or transfer restrictions and generally fit within an investor’s investment guidelines. Financing strategies vary among the borrowers. Some corporate treasurers prefer to “go in for size” on one day with financings in the $50 million to $100 million range, reasoning that smaller offerings are more time consuming. Furthermore, a firm may be able to maintain a “scarcity value” for its debt by financing intermittently with large offerings, rather than continuously with small offerings. Other treasurers prefer to raise $50 million to $100 million over the course of several days with $2 million to $10 million draw downs. These corporate treasurers argue that a daily draw down of $50 million is an indication that they should have posted a lower offering rate. In regard to the posting of offering rates, some treasurers post an absolute yield, while others post a spread over Treasuries, usually with a cap on the absolute yield. A few active borrowers typically post rates daily in several maturity sectors; less active borrowers post only in the maturity sector in which they seek financing and suspend postings when they do not require funds. Apart from the distribution process, MTNs have several less significant features that distinguish them from underwritten corporate bonds. First, MTNs are typically sold at par, while traditional under writings are frequently sold at slight discounts or premiums to par. Second, the settlement for MTNs is in same-day funds, whereas corporate bonds generally settle in next-day funds. Although MTNs with long maturities typically settle five business days after the trade date (as is the convention in the corporate bond market), MTNs with short maturities sometimes have a shorter settlement period.

Finally, semiannual interest payments to note holders are typically made on a fixed cycle without regard to the offering date of the maturity date of the MTN; in contrast, corporate bonds typically pay interest on the first or fifteenth day of the month at six-month and annual intervals from the date of the offering. The interest payment convention in the MTN market usually results in a short or a long first coupon and in a short final coupon. Consider, for example, an MTN program that pays interest on March 1 and September 1 and at maturity of the notes. A $100,000 MTN sold on May 1 with a 9 percent coupon and a fifteen-month maturity from such a program would distribute a “short” first coupon of $3,000 on September 1, a full coupon f $4,500 on March 1, and a “short” final coupon of $3,750 plus the original principal on August 1 of the following year. Like corporate bonds, interest on fixed-rate MTNs is calculated on the basis of a 360-day year of twelve 30-day months. Commissions to MTN agents typically range from 0.125 percent to 0.75 percent of the principal amount of the note sale, depending on the stated maturity and the credit rating assigned at the time of issuance. Fees to underwriters of bond offerings are somewhat higher. The administrative costs may be lower with MTNs than with bonds. After the borrower and the investor have agreed to the terms of a transaction in the MTN market the borrower files a one-page pricing supplement with the SEC, stating the sale date, the rate of interest, and the maturity date of the MTN. In contrast, issuers of corporate bonds sold from shelf registrations are required to file a prospectus supplement. These yield spreads are estimated using the model presented in Leland E. Crabbe and Christopher M. Turner, “A Dynamic Linear Model of the Determinants of Yield Spreads on Fixed-Income Securities,” (Board of Governors of the Federal Reserve System, working paper, June 1993). An additional reason for the high credit quality of structured MTNs is that some investors, such as money market funds, face regulatory restrictions on the credit ratings of their investments. See Leland Crabbe and Mitchel A. Post, “The Effect of SEC Amendments to Rule 2a-7 on the Commercial Paper Market,” Finance and Economics Discussion Series 199 (Board of Governors of the Federal Reserve System, May 1992). Banks also issue bank notes with shorter maturities that range from seven days to one year. These short-term bank notes are sold to money market investors with interest calculated on a CD basis or discount basis. As with medium-term bank notes, short-term bank notes are issued at the bank level, and they are not insured. Short-term bank notes differ from commercial paper in that commercial paper is an obligation of the bank holding company. These figures on issuance and outstandings are not directly comparable with those reported in the Federal Reserve’s survey because the DTC totals include bank notes and deposit notes issued by banks, as well as MTNs issued by foreign corporations. See Mark S. Carey, Stephen D. Prowse, John D. Rea, and Gregory F. Udell, “Recent Developments in the Market for Privately Placed Debt,” Federal Reserve Bulletin, (February 1993), Besides meeting the securities test, banks and savings and loans must also have a net worth of at least $25 million. In contrast to other investors, broker-dealers must own only $10 million of securities. Bonds and MTNs may be classified as either domestic or international. By definition, a domestic offering is issued in the home market of the issuer. For example, MTNs sold in the United States by U.S. companies are domestic MTNs in the U.S. market. Similarly, MTNs sold in France by French companies are domestic MTNs in the French market. Bonds and MTNs sold in the international market can be further classified as foreign or Euro. Foreign offerings are sold by foreign entities in a domestic market of another country. For example, bonds sold by foreign companies and sovereigns in the U.S. market are foreign bonds, known as “Yankee bonds.” Euro-bonds and Euro-MTNs are international securities offerings that are not sold in a domestic market. As a practical matter, statisticians, tax authorities, and market participants often disagree about whether particular securities should be classified as domestic, foreign, or Euro.

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Proof Of Funds (POF)| C M LOANS LIMITED…….. is a document or bank statement proving that a person has the financial ability to perform a transaction. For instance, a POF is generally obligatory for people seeking mortgages as bankers are often more willing to issue them to those who have the sufficient funds to pay their mortgages off as opposed to those who cannot do so. Thus, a POF letter provides the selling or lending party with confidence that the funds are obtainable and legitimate.

CONTENT

1. How Proof of Funds May Be Used in Practice
2. Leased Proof of Funds
3. Standby Letter of Credit
4. Blocked Proof of Funds Letter
5. References

Uses of Proof Of Funds (POF)

A POF is commonly used when funding large-scale investments such as buying a house or property as real-estate agents tend to demand evidence that the buyer has such affordability. One way in which a person can acquire a POF is by requesting the bank to confirm and approve the amount of cash that the person has in hand. The bank should also approve of the availability and legality of the funds to be used as a transaction before the funds can be transferred. If interested in buying property, the property beneficiary should be convinced of the fact that the buyer has such affordability to buy such property.  However, since every POF document has an expiry date, at which point the document becomes of no use to the seller, it is essential to keep it up to date especially as the buyer’s POF submission and the seller’s process of approval can, in some cases, consume a substantial amount of time, taking weeks and even months to finish the process.

Leased Proof of Funds

A POF can in some cases be borrowed or leased, which is where a client pays a fee for cash to be deposited into their personal or business bank account, but the cash is limited by the bank as the client is not permitted to withdraw it or complete transactions with it. By keeping the funds unable to be used, it safeguards the asset holder and makes them ensure that the cash can solely be used to complete POF transactions based on what the loan agreement dictates.

Blocked Proof of Funds Letter

A blocked POF letter is a letter from a financial institution or government that approves the halting or reserving of a person’s funds on behalf of them. Governments can reserve a country’s funds by restricting the maximum amount of funds that is allowed to be spent at a certain period of time in order to control the country’s cash flow. Other circumstances where funds may need to be blocked may be due to political or emergency reasons such as during war or following the death of an account holder.

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TREASURY BILLS (T-BILLS)- C M LOANS LIMITED is a short-term debt obligation backed by the government with a maturity of less than one year, sold in denominations of $1,000 up to a maximum purchase of $5 million. T-bills have various maturities and are issued at a discount from par. When an investor purchases a T-Bill, the government writes an IOU; investors do not receive regular payments as with a coupon bond, but a T-Bill pays an interest rate.

BREAKING DOWN ‘Treasury Bill – T-Bill’

T-Bills are attractive to investors because they offer a very low-risk way to earn a guaranteed return on invested money. They benefit the government because the government uses the money raised from selling T-bills to fund various public projects, such as the construction of schools and highways. T-bills can have maturities of just a few days up to the maximum of 52-weeks, but common maturities are one month, three months or six months. The longer the maturity date , the higher the interest rate that the T-Bill will pay to the investor.

Purchase Process

T-bills can be purchased at auctions held by the government, or investors can purchase T-bills on the secondary market that have been previously issued. T-Bills purchased at auctions are priced through a competitive bidding process, at a discount from the par value. When investors redeem their T-Bills at maturity, they are paid the par value. The difference between the purchase price and par value is interest. For example, an investor purchases a par value $1,000 T-Bill for $950. When this T-Bill matures, the investor is paid $1,000, thereby making $50 on the investment.

Benefits to Investors

There are a number of advantages that T-bills offer to investors. They are considered low-risk investments because they are backed by the credit of the government. With a minimum investment requirement of just $1,000, and a maximum investment of $5 million, they are accessible by a wide range of investors. In general, interest income from Treasury bonds is exempt from state and local income taxes. They are, however, subject to federal income taxes, and some components of the return may be taxable at sale/maturity. The main downfall of T-bills is that they offer lower returns than many other investments, but these lower returns are due to their low risk. Investments that offer higher returns generally come with more risk.

We are here to help you obtain all bank instruments of any kind with our able and customer friendly staffs, we promise to walk with you all the way.

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MONETIZATION OF BANK INSTRUMENT- C M LOANS LIMITED – Monetization is the process of converting or establishing something into legal tender. While it usually refers to the coining of currency or the printing of banknotes by central banks, it may also take the form of a promissory currency.

The term “monetization” may also be used informally to refer to exchanging possessions for cash or cash equivalents, including selling a security interest, charging fees for something that used to be free, or attempting to make money on goods or services that were previously unprofitable or had been considered to have the potential to earn profits. And data monetization refers to a spectrum of ways information assets can be converted into economic value.

Still another meaning of “monetization” denotes the process by which the U.S. Treasury accounts for the face value of outstanding coinage. This procedure can extend even to one-of-a-kind situations such as when the Treasury Department sold an extremely rare 1933 Double Eagle, the amount of $20 was added to the final sale price, reflecting the fact that the coin was considered to be issued into circulation as a result of the transaction.

Promissory currency

Such commodities as gold, diamonds and emeralds have generally been regarded by human populations as having intrinsic value within that population based on their rarity or quality and thus provide a premium not associated with fiat currency unless that currency is “promissory”. That is, the currency promises to deliver a given amount of a recognized commodity of a universally (globally) agreed-to rarity and value, providing the currency with the foundation of legitimacy or value. Though rarely the case with paper currency, even intrinsically relatively worthless items or commodities can be made into money, so long as they are difficult to make or acquire.

Debt monetization

Debt monetization is the financing of government operations by the central bank.[1] If a nation’s expenditure exceeds its revenues, it incurs a government deficit which can be financed by the government treasury by

money it already holds (e.g. income or liquidations from a sovereign wealth fund)

issuing new bonds

or by the central bank by

money it creates de novo

In the latter case, the central bank may purchase government bonds by conducting an open market purchase, i.e. by increasing the monetary base through the money creation process. If government bonds that have come due are held by the central bank, the central bank will return any funds paid to it back to the treasury. Thus, the treasury may “borrow” money without needing to repay it. This process of financing government spending is called “monetizing the debt.

In most high-income countries the government assigns exclusive power to issue its national currency to a central bank [citation needed], but central banks may be forbidden by law from purchasing debt directly from the government. For example, the Treaty on the Functioning of the European Union (article 123) forbids EU central banks’ direct purchase of debt of EU public bodies such as national governments. Their debt purchases have to be from the secondary markets. Monetizing debt is thus a two-step process where the government issues debt (Government bonds) to cover its spending and the central bank purchases the debt, holding it until it comes due, and leaving the system with an increased supply of money.

Debt monetization and inflation

When government deficits are financed through debt monetization the outcome is an increase in the monetary base, shifting the aggregate-demand curve to the right leading to a rise in the price level (unless the money supply is infinitely elastic).[2][3] When governments intentionally do this, they devalue existing stockpiles of fixed income cash flows of anyone who is holding assets based in that currency. This does not reduce the value of floating or hard assets, and has an uncertain (and potentially beneficial) impact on some equities. It benefits debtors at the expense of creditors and will result in an increase in the nominal price of real estate. This wealth transfer is clearly not a Pareto improvement but can act as a stimulus to economic growth and employment in an economy overburdened by private debt.[citation needed] It is in essence a “tax” and a simultaneous redistribution to debtors as the overall value of creditors’ fixed income assets drop (and as the debt burden to debtors correspondingly decreases). If the beneficiaries of this transfer are more likely to spend their gains (due to lower income and asset levels) this can stimulate demand and increase liquidity. It also decreases the value of the currency – potentially stimulating exports and decreasing imports – improving the balance of trade. Foreign owners of local currency and debt also lose money. Fixed income creditors experience decreased wealth due to a loss in spending power. This is known as “inflation tax” (or “inflationary debt relief”). Conversely, tight monetary policy which favors creditors over debtors even at the expense of reduced economic growth can also be considered a wealth transfer to holders of fixed assets from people with debt or with mostly human capital to trade (a “deflation tax”).

A deficit can be the source of sustained inflation only if it is persistent rather than temporary, and if the government finances it by creating money (through monetizing the debt), rather than leaving bonds in the hands of the public.[4]

Revenue from business operations

In some industry sectors such as high technology and marketing, monetization is a buzzword for adapting non-revenue-generating assets to generate revenue. Web sites and mobile apps that do generate revenue are often monetized via advertisements, subscription fees or (in the case of mobile) in-app purchases. In the music industry, monetization happens when a recording artist puts a video on the Internet and the platform where it appears shows advertisements before, during, or after the video. For each public viewing, the advertising revenue is shared with the artist or others who hold rights to the video content. A previously free product may have premium options added thus becoming freemium.

Failure to monetize web sites due to an inadequate revenue model was a problem that caused many businesses to fold during the dot-com bust. David Sands, CTO for Citibank Equity Research, affirmed that failure to achieve monetization of the Research Analysts’ models as the reason the de-bundling of Equity Research has never taken hold.

Monetization of non-monetary benefits

Monetization is also used to refer to the process of converting some benefit received in non-monetary form (such as milk) into a monetary payment. The term is used in social welfare reform when converting in-kind payments (such as food stamps or other free benefits) into some “equivalent” cash payment. From the point of view of economics and efficiency, it is usually considered better to give someone a monetary equivalent of some benefit than the benefit (say, a liter of milk) in kind.

Inefficiency: in the latter situation people who may not need milk cannot get something of equivalent value (without subsequently trading or selling the milk).

Black market growth: people who need something other than milk may sell it. In many circumstances, this action may be illegal and considered fraudulent. For example, Moscow pensioners (see below for details) often give their personal cards that allow free usage of local transport to relatives who use public transport more frequently.

Changes on the market: supply of milk to the market is reduced by the amount distributed to the privileged group, so the price and availability of milk may change.

Corruption: firms that should give this benefit have an advantage as they have guaranteed consumers and the quality of the goods supplied is controlled only administratively, not by market competition. So, bribes to the body that choose such firms and/or maintain control can take place.

In 2005, Russia transformed most of its in-kind benefits into monetary compensation.

Before this reform there were a large system of preferences: free/reduced price of travels on local transport, free supply of drugs, free health resort treatment, etc. for diverse categories of society: military personnel, the disabled, and separately, persons disabled due to WWII, Chernobyl disaster “liquidators,” inhabitants of Leningrad during the siege, former political prisoners, and for all pensioners (that is, women 55+, men 60+). This system was a legacy of the Soviet Union, but it was heavily extended by populist laws passed by central and regional authorities during the 1990s.

By the law 122-ФЗ of 22 August 2004, this system was converted into cash payments by various means:

Abolition of preference, compensated by raising of wage (e.g. free use of local transport for military personnel) or pension (e.g. different preferences for Chernobyl liquidators)

For the three most important preferences (free local transport, 50%-price suburban rail transport, free supply of drugs): a choice between the preference and some extra money.

The main causes of friction in the reform were the following:

technical and bureaucratic problems (e.g. for usage of the 50% discount for suburban rail transport, a person would need to present a paper from the local State Pension Fund office stating that he/she doesn’t choose monetary compensation);

separation of all preference-recipients into federal and regional according to the body authorizing the preference. The largest group — pensioners — was regional, and this caused most of the problems: In poor regions, financial pressure caused the local government to abolish these preferences with little or no compensation to the former recipients.

Even if the preferences were retained, they would apply only to pensioners of the region in question. Thus, pensioners from the Moscow Oblast (administrative region), for example, could not freely use the metro and buses in Moscow proper, because these are two different local governments. Later, most of these problems would be solved by a series of bi-lateral agreements between neighboring regions.

A wave of protests emerged in various parts of Russia in the beginning of 2005 as this law started to take effect. The government responded with measures that eventually addressed the most pressing of the protesters’ concerns (raising of compensations, normalization of bureaucratic mechanisms, etc.).

The long-term effects of the monetization reform varied for different groups. Some people received compensation in excess of the services they had previously received (e.g. in rural areas without any local transport, the free transport benefit was of little value), while others found the compensation to be insufficient to cover the cost of the benefits they had previously depended on. Transport companies and railroads have benefitted from monetization as they now collect higher revenue from the use their services by pensioners who had previously ridden at the government’s expense. (In some regions, more than half of the passengers formerly did not pay for municipal transport, but the government did not compensate the transport companies for the full fare of these passengers.) Effects on the medical system are controversial. Doctors and nurses have to fill out many forms in order to receive compensation from the government for services provided to pensioners, thus reducing the time that they have to provide medical services.

United States agricultural policy

In United States agricultural policy, “monetization” is a P.L. 480 provision (section 203) first included in the Food Security Act of 1985 (P.L. 99-198) that allows private voluntary organizations and cooperatives to sell a percentage of donated P.L. 480 commodities in the recipient country or in countries in the same region. Under section 203, private voluntary organizations or cooperatives are permitted to sell (i.e., monetize) for local currencies or dollars an amount of commodities equal to not less than 15% of the total amount of commodities distributed in any fiscal year in a country. The currency generated by these sales can then be used: to finance internal transportation, storage, or distribution of commodities; to implement development projects; or to invest and with the interest earned used to finance distribution costs or projects.

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Bank Guarantee (BG)- Sometimes business need to guarantee payments and the best way to do so is to provide a bank guarantee which ensures the creditor that payment will be made once the transaction is complete.

It is a type of warranty that a bank provides individual to provide loan, payment or services to start business activity.

A bank guarantee is promise /surety that is provided by a financial institutions that if a particular borrower defaults on a loan, the bank will cover the loss by paying off the debt and liabilities incurred by the individual or business entity in case they are unable to pay.

Please note that the bank guarantee is not the same as a letter of credit.

Who can get a Bank Guarantee (BG)?

Anyone can get a Bank Guarantee as afar as all criteria are met.

By providing a Bank Guarantee, a bank offers to honor any payment to the creditors upon receiving a request. This requires that the financial institution be very sure of the business or the individual to whom the bank guarantee is being issued. So banks run risk assessments to ensure that the guaranteed sum can be retrieved back from the business. This may require one to present something in the shape of cash or capital assets.

Any individual/organization that can pass the risk assessment and provide security may obtain a bank guarantee.

How do Bank Guarantees Work

The system for providing bank guarantees works like this

1. The applicant and the creditor ascertain that there is a need for a bank guarantee.
2. The applicant reaches out to a financial institution to issue a bank guarantee to the creditor.
3. The bank runs a risk assessment and asks for security.
4. The applicant provides the security and the bank or financial institution processes the bank guarantee.
5. The bank guarantee is sent to the creditors bank or to the creditor or the applicant may be asked to collect it in person to give to the creditor.

Benefits of a Bank Guarantee

1. A Bank Guarantee enables companies to make purchases that they would otherwise not be able to make, this guarantees thus serves to heighten business activity and expand enterprenural activity.
2. All the money is not tied up in one project but can be spread around into other projects.
3. There is cash available to explore and expand business.

Categories Of Bank Guarantees.

There are two categories of bank guarantees in general

1. Direct Bank Guarantee: this is a guarantee which is issued by the bank of the account holder directly in form of the beneficiary.
2. Indirect Guarantee is a guarantee which is issued by a second bank in return for a counter guarantee.

A financial institution can provide many different types of bank guarantees

1. Performance Guarantee/ Performance Bond: These are bonds that act as collateral for any loss suffered by the buyer in case the performance of the seller is below par.
2. Advance Payment Guarantee: This is to ensure the safety of any advance payment made by the buyers to the sellers. In case the seller is unable to deliver the service or the goods, then the buyer can get his money back.
3. Payment Guarantee: This guarantee is provided to the seller, ensuring payment by a predetermined date.
4. Conditional Payment Undertaking: This is an instruction to the bank from an account holder to pay a sum of money to a creditor on completion of certain conditions. This bond is a post contract instrument that is used to pay off agents and contractors on completion of a project
5. Guarantee Securing Credit line: This surety is given to a creditor on claims against the debtor in case a loan is not repaid as per the terms of the agreement.

Order and Counter Guarantee: This is a surety given by the debtor to the creditor, to protect against the failure to fulfil an obligation as contracted. In case of default, the creditor can demand the payment back.

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Standby letter of credit- Financing a business is not always easy to come by but it is important to look down every avenue of opportunity. You might not be aware of one of the most powerful financing tools out there.

Standby letter of credit (SBLC or SLOC) can help your business in tough contractual and financing solutions, making people more likely to sign contracts and also do business with you.

WHAT IS A STANDBY LETTER OF CREDIT?

An SBLC/SLOC is a genuine guarantee of payment by a   bank on behalf of their client. It is a loan of last resort in which the bank fulfills payments obligations by the end of the contract if their clients cannot.

The standby letter of credit is never meant to used but to prevent contracts from going unfulfilled in the event your company closes down, declares bankruptcy or is unable to pay for goods or services provided. SBLC/SLOC help prove a business credit quality and repayment abilities.

TYPES OF SBLC/SLOC

PERFORMANCE SBLC/SLOC

Performance SLOC ensures the non-financial contractual obligations( quality of work, amount of work, time, cost etc) are performed in a timely and satisfactory manner.

If these obligations are not met, the bank will pay the third party in full.

FINANCIAL SBLC/SLOC

This ensures contractual obligations are fulfilled.

Most SBLCs are financial. Financial SBLCs are often required when performing international trade or other large purchase contract under which other forms of payment protection (such as litigation in the event of non-payment) can be difficult to obtain.

HOW TO OBTAIN A SBLC/SLOC

The SBLC is similar to that of obtaining a commercial loan, with a few key differences. As with any business loan, you will need to provide proof of your credit worthiness to the bank.

However, the SLOC approval process is much quicker with letters often being issued within 3-7 working days of all paper works being submitted.

The bank will require a SBLC/SLOC fee of between 1-10% of the amount before issuing the letter of credits is in effect. If the terms of the contract are fulfilled early, you cancel the SBLC/SLOC by incurring additional charges.

SBLCs/SLOCs help to establish trust with your business partners and be a powerful tool to help meet your business goals.

Talk with us at https://www.cmloanslimited.com/apply-for-loan/ about how you can obtain and use a SBLC/SLOC for the growth and expansion of your business.

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WHAT IS SWIFT

Swift is a provider of secure message platform for financial institutions. Swift is used mainly by banks. Swift messages have been sent and received by banks in encrypted forms. As a result, swift messages are accepted as a valid and reliable way of communication between banks. For example an issuing bank sends a swift message to an advising bank in order to inform issuance of a documentary credit. Similarly advising banks sends their acknowledgement via swift platform.

Swift messages play a key role not only in letters of credit but also but also in other payment methods in international trade such as bank guarantee (BG), cash in advance payments, documentary collections, opens accounts and bank payments obligations.

WHAT IS A MT760 GUARANTEE/STANDBY LETTER OF CREDIT IN TRADE FINANCE?

MT 760 is a special swift message type that is used by issuing banks when issuing a guarantee or a standby letter of credit.

Issuing banks sends terms and conditions of the guarantee or a standby letter of credit briefly with a MT760 guarantee/SBLC swift message type.

MT760 GUARANTEE/STANDBY LETTER OF CREDIT RULES IN TRADE AND FINANCE

1. This message is sent between banks involved in the issuance of a guarantee.
2. It is used to issue a guarantee or to request the receiver to issue the guarantee.
3. This message may also be used for SBLCs/SLOCs.
4. Any applicable rules must be indicated in field 40c. if no rules are applicable, this must also be indicated (code”NONE”).

If the guarantee is subject to rules other than Uniform Rules for Demand Guarantee (URDG), or international standby practices (ISP), or international chamber of commerce (ICOC) then it must be indicated in field 40C using the code OTHR.

The definition of this message type does not specify any characteristics or underlying  agreementsof the actual guarantee. Therefore, all specific terms, conditions and details of the guarantee are to be specified in field 77C.

Since a Swift message is restricted to the maximum input message length, more than one MT760 may be required to accommodate all the details of the guarantee.

WHAT DOES THE CURRENT BANK GUARANTEE RULES (URDG758) OR STANDBY LETTER OF CREDIT RULES (ISP 98) SAY ABOUT ISSUANCE OF A BG OR SBLB/SLOC?

1. According to URDG 758 a guarantee is deemed to be issued when it leaves the control of the guarantor.
2. URDG 758 states that a guarantee is irrevocable on issue even if it does not state this.
3. As per URDG 758 a guarantee may be advised to a beneficiary through an advising bank. By advising a guarantee, the advising bank certifies to the beneficiary that is has satisfied itself as to the apparent authenticity of the guarantee. Advising banks also certifies that the advice accurately reflects the terms and conditions of the guarantee as received from the issuing bank.
4. According to ISP 98 a standby letter of credit is an irrevocable, independent, documentary and binding undertaking when issued and need not to state.
5. ISP 98 states that unless an advice states otherwise, it signifies that

– The advisor has checked the apparent authenticity of the advised message in accordance with standard letter of credit practice and

– The advice accurately reflects what has been received.

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