Letters of Credit

Standby Letters of Credit
A standby letter of credit is issued by a bank on behalf of a customer. The bank promises to pay a specified sum of money to a beneficiary upon presentation of required documents indicating our customer has defaulted or failed to perform under a contract or agreement.

Features

  • Bank guarantee of funds to third party
  • Credit is issued as a backup and is not intended to be drawn upon
  • Allows customer to establish credit with third party
  • Saves customer cash for working capital

Commercial Letters of Credit
A commercial letter of credit is an instrument issued on behalf of a customer whereby the bank promises to pay a specified sum of money to a beneficiary upon presentation of required documents.

Uses

  • To make payment for purchase of goods or services
  • Issued to vendor for new inventory
  • International transactions

Features

  • Bank guarantee of funds to third party
  • A way to gain credibility with a new vendor

For more information, please contact us via phone or e-mail or visit any UMB banking center.