Letter of Credit (LC)
Sight and Usance LCs for import / domestic purchases. Your bank guarantees payment to the supplier on document presentation - enabling credit terms with global vendors.
Trade Finance
Trade Finance – LC, BG & Bill Discounting
Letter of Credit, Bank Guarantee and Invoice Discounting facilities for importers, exporters, contractors and traders. Issued across Government, MNC and Private Banks.
- Loan Amount
- ₹50 Lakhs – ₹100 Crore
- Interest Rate
- LC/BG commission: 1.5% – 3% p.a. · Bill discounting: 8.5% – 12% p.a.
- Tenure
- LC/BG: 90 days to 3 years · Bill discounting: 30 to 180 days
- Processing Fee
- 0.25% – 0.75% of facility limit
About Trade Finance - LC, BG, Bill Discounting
Trade Finance is the umbrella term for the three banking instruments that make modern commerce possible - Letter of Credit (LC) gives your overseas supplier a payment guarantee from your bank so they ship without fear, Bank Guarantee (BG) gives your client or government department assurance that you'll perform a contract, and Bill / Invoice Discounting converts your unpaid receivables into immediate cash. BankBrick arranges sight LCs, usance LCs, financial BGs, performance BGs, mobilisation advance BGs, EPC bid bonds, post-shipment finance, packing credit, factoring and bill discounting - all placed across Government Banks, MNC Banks and Private Banks. We handle the underlying credit appraisal, security creation, margin negotiation and issuance - typically in 7–15 working days. Limits are reviewed annually and scale with your business volume.
Key Features
Bank Guarantee (BG)
Financial BGs, Performance BGs, Bid Bonds, Advance Payment Guarantees and Mobilisation BGs - essential for EPC contractors, exporters and tender participation.
Bill / Invoice Discounting
Convert post-shipment invoices into immediate cash. Reduce 60–120 day receivables cycles to 24 hours - without breaking buyer relationships.
Packing Credit & Post-Shipment
Pre-shipment credit for exporters at concessional interest (PCFC) and post-shipment finance backed by export orders or LCs.
Structured Facility Placement
LC/BG sub-limits are structured around your business needs, with competitive commission rates, clear terms and faster issuance.
Margin Optimisation
We negotiate cash margins (typically 10%–25%) and FD-backed margin structures so working capital isn't needlessly tied up in security.
Why Choose BankBrick for Trade Finance - LC, BG, Bill Discounting?
- Enable global procurement on credit terms via LC - no upfront cash to suppliers
- Win government and PSU tenders that mandate BG - financial, performance, EMD
- Convert 60–120 day receivables into next-day cash via bill discounting
- Lower interest cost than working capital loans for export-linked finance (PCFC, FBP)
- Multi-bank LC/BG sub-limits - diversify counterparty risk and negotiate better commission
- End-to-end issuance support - drafting, submission, beneficiary coordination
Eligibility Criteria
| Entity Type | Proprietorship, Partnership, LLP, Pvt Ltd, Public Ltd |
|---|---|
| Business Vintage | Minimum 2 years of operations |
| Annual Turnover | ₹2 Crore and above (₹5 Crore+ preferred for higher limits) |
| CIBIL - Entity | CIBIL MSME Rank (CMR) of 1–6 |
| Banking Conduct | No major returns / overdraft instances in last 12 months |
| Security | Cash margin (10%–25%), counter-indemnity, collateral or charge over current assets |
Required Documents
- PAN of entity + KYC of promoters/directors
- Last 2 years audited financials + ITR
- GST registration + last 12 months returns
- Last 12 months bank statements (all accounts)
- IEC code (for import/export LCs)
- Underlying purchase order / sales contract / tender document
- Buyer details and credit terms (for bill discounting)
- Existing sanction letters (if applicable - for enhancement)
FAQ
Common Questions, Clear Answers
Have more questions? Our team is here to help. Reach us on WhatsApp or give us a call.
What is the difference between a Letter of Credit (LC) and a Bank Guarantee (BG)?
An LC is a payment instrument - your bank pays the supplier on presentation of correct shipping documents. A BG is a security instrument - your bank pays the beneficiary only if you default on a contractual obligation. LCs are used in trade (you're buying something); BGs are used in performance assurance (you're promising something will be done).
How long does LC or BG issuance take?
For an existing customer with a sanctioned LC/BG sub-limit, issuance is 24–48 hours after documents are submitted. For first-time setup of a fresh limit, expect 2–3 weeks for credit appraisal, security creation, and the bank's sanction letter - then 24–48 hours for actual issuance.
What is bill / invoice discounting and how is it different from a loan?
You sell your unpaid invoice to the bank at a discount. The bank pays you ~95% upfront and collects the full invoice value from the buyer on due date. It's not a loan against you - it's an advance against your buyer's credit. Limits depend on the buyer's credit profile, not just yours, which is ideal for SMEs supplying to blue-chip corporates and PSUs.
How much cash margin will the bank ask for?
Typical margin is 10%–25% of the LC/BG amount, parked as a fixed deposit lien-marked to the bank. The margin earns FD interest, partially offsetting the LC/BG commission. We negotiate margin reduction based on collateral, banking conduct and the strength of the underlying transaction.
Can I get LC and BG from the same bank that gives me working capital?
Yes - and this is the most cost-efficient structure. LC and BG sub-limits typically sit within your overall fund-based and non-fund-based working capital sanction. Adding sub-limits to an existing CC/OD facility is faster and cheaper than approaching a new bank.
Discuss Your Requirements
Discuss Your Requirements