Letter of Credit is a commitment given by Wellspring Global Capital on behalf of the applicant (Buyer) to make payment to the beneficiary (supplier) subject to presentation of documents strictly in conformity with the terms of the credit.
Wellspring Global Capital undertake all activities relating to L/C such as Issuance, Advising, Confirmation, Negotiation and Collection to meet the end-to-end requirements of clients engaged in international trade.
Wellspring Global Capital issue Import LCs on behalf of customers (buyers) favouring overseas exporters (sellers) guaranteeing payment on fulfilment of the terms and conditions of credit.
Wellspring Global Capital also advice L/Cs received from another Bank to the beneficiaries either directly or through their Bankers.
By adding confirmation on Letter of Credit, Wellspring Global Capital take care of payment risks relating to overseas buyer, L/C issuing bank and other risks associated with the country of issue of letter of credit.
A standby documentary credit is an undertaking activated only in the event that the buyer defaults on payment. It therefore allows the seller to enforce a claim. A standby documentary credit acts as a bank guarantee. Standby letters of credit are usually subject to Uniform Customs and Practice for Documentary Credits (UCP), ICC Publication No. 600 but may be subject to ISP98 rules.
Contrary to a documentary credit, documents must be presented to the bank only when the buyer has failed to fulfill his obligations.
Simply put, a Bank Guarantee is a commitment by a bank or the issuing party to pay a set amount of money to a nominated beneficiary, as compensation, in the event of a default by the client.
Construction and development, expanding companies, trading platforms and the establishment of trading facilities.
Each product has a different requirement but typical documents are : Business plan, feasibility study, CV’s, cash flows, budgets, QS reports, exit strategy, funds already invested, property valuations, asset valuations and clients personal and company balance sheets, proof of funds to pay admin fee and BG costs. Full lists for each different type of BG are available from us.
• Can be used to enhance your ability to secure a credit facility, especially if it is 100 % cash-backed (Cash backed is when someone has blocked funds in their account, to allow issue of the BG).
• Can be used as added security / collateral for a loan
• Can be issued for 3 months to up to 5 years
• Certain BG’s can be monetised. You need to verify this prior to issue. Your bank may charge a fee to “monetise” the Bank Guarantee.
• Fees cannot be paid from the trade profits. The instrument fees are always payable when the instrument is issued. Costs and rates vary BUT in many cases this is cheaper than other forms of credit and the big advantage of this instrument, is that if you have a credible trade proposal, you can access a large trade facility with a fee which is relatively small in relation to the trade benefit to you.
Our Bank Guarantee associates are able to set up a facility on your behalf, out of which you may issue financial instruments (Letters of Credit) to your suppliers as and when required. The facility will be with your local bank. To set up this facility a full feasibility proposal needs to be sent to the relevant bank. Our associates are able to provide these types of facilities and instruments, as they have suppliers of BG’s in Europe, who will avail securities to the local bank in order for a trade facility to be structured, on your behalf.
This is all credible, as local attorneys draw up an agreement confirming what the service providers duties and responsibilities are in setting the facility set up for you. Only once the service level agreement is agreed to by you and signed will the work commence.
Once the facility is set up, you will be in a position to issue Guarantees, Standby Letters of Credit and Letters of Credit to your suppliers, which provides them with the payment undertakings and security they need to trade with you. Please bear in mind that these financial instruments will be issued out of your facility at a local or international bank.
The following is required in order to commence with the establishment of a trade facility : An administration fee of ZAR 35 000 in order to commence negotiations with our providers, to pay them to block certain instruments and to arrange the agreement from the appointed attorney on the undertakings with respect to establishment of a trading facility for you.
A presentation fee of ZAR 200 000 to be lodged in a nominated attorneys trust account (yours or ours), for purposes of producing a feasibility study, business plan and to do the presentations to the banks to secure a trade facility. The agreement mentioned above, governs the process, milestones, deliverables and the responsibilities, to you.
Prove your vendor or your business partner of your finances assuring your capability to complete the deal with a bank comfort letter without a hassle. Now at Wellspring Global Capital, we offer simple and easy bank comfort letter services to help you get your bank comfort letter fast.
A bank comfort letter is a letter of confirmation issued by the bank on behalf of their client assuring that he or she has sufficient funds to complete the business deal as pre-agreed. It is used mostly in huge commodity contracts when the seller would like to get assured of the financial capability of the buyer before proceeding further in the contract. However, this doesn’t imply any assurance of payment. The statement is based on facts and doesn’t make the bank obligated to any financial commitment.
We are a leading financial instrument service provider in the SA who has extensive experience in obtaining bank comfort letter on behalf of our clients. Get in touch with us today and our team will get back to you soon.
Payment and Performance Bonds are two separate bonds that are often required for both public and private contracts. While they are separate bonds, they are often included together and may also be referred to as a P&P Bond. Learn more below, and apply today through our convenient online system.
People often confuse these bonds as the same. Although payment bonds are a requirement for many construction projects along with performance bonds, they have different purposes. Let's take a closer look at each.
A performance bond is a surety bond that is issued by a bonding company or bank to guarantee satisfactory completion of a project by a contractor. It protects the owner in case the contractor fails to complete the contractual obligations. If the obligations are not met, the surety company will step in and pay the claim. Afterwards, the surety company will seek reimbursement from the contractor.
These bonds are used to safeguard the owner, contractor and the people associated with the project (i.e. the public). The government or corporate entities often require these bonds for any task where taxpayers’ investments need to be protected. In government projects, one submits an application for such projects as bridges and roads. More frequently, we are seeing private owners requiring performance and payment bonds as well. This protects the private owner from a contractor who may not be able to properly complete the work and also protects the owner from double payment (i.e. having to potentially pay subcontractors twice, due to a GC defaulting and not paying their subs).
Payment bonds are a guarantee that the contractor will pay all laborers, material suppliers, and contractors per contractual obligations.
P&P Bonds can have any face value, but they are usually issued in an amount covering 50 to 100% of the value of the construction contract, with 100% performance and payment bonds being the most frequent.
If you need a payment and performance bond, the premium can range from around 0.5% of the contract value on the low end to 3% on the higher end. Larger contractors will typically have a competitive sliding scale rating structure. However, the cost can vary widely from company-to-company, depending on the financial capacity, company history and credit, among other items.
Surety bonds should not be confused with an insurance policy. What makes them different is that in an insurance policy, the insurer has to defend the insured as well as cover them. More importantly, they are not able to get repaid from the insured for the amount of any loss or any costs associated with the claim.
In comparison, a claim on a bond ensures that the surety company evaluates the case of the claim and the contractor to make sure that there is a valid claim and, more importantly, the surety will ask the contractor to reimburse it for any claim damages and lawsuit fees, should the surety need to payout on the contractor's behalf.
Before approving a P&P Bond, the surety company ensures that they check the applicant’s character, history of contract performances, necessary equipment, financial strength, history of paying subcontractors and suppliers on time, bank relationships and an established line of credit. These are all factors that go into the underwriting process and affect the single/aggregate program considerations.
A Performance Guarantee is issued by an insurance company or bank to a contractor to guarantee the full and due performance of the contract according to the plans and specifications.
A project requiring a payment & performance bond will usually require a bid bond, in order to qualify to bid for the project. A payment and performance bond will then be required of the winning bidder as a security to guarantee job completion.
Should the contractor fail to construct the building according to the specifications laid out by the contract, the client is guaranteed compensation for any monetary losses up to the amount of the performance bond.
We provide proof of funds (POF) documents for our clients to help them demonstrate to a business partner or seller of goods that they have the financial capacity and funds required to pay for a transaction. We may make this available either as a security statement, a custody statement or as a bank statement. So whenever you need to provide proof to partners that you indeed have the funds required to facilitate a transaction, getting a proof of funds will assure the seller that you have legitimate access to the funds.
Proof of funds for immigration – This document may also be required for immigration purposes to show the country you intend on settling in or traveling to that you have the right amount of funds to support yourself and your family while you reside in their country. They are usually attached to visa applications. The money your proof of funds shows you have available must be yours that is, it must not be borrowed and you should have unlimited access to it so you are able to pay for living expenses. We make a verifiable account in your name with the required funds in them that shows you can indeed access these funds. This kind of proof of payment will typically contain your name, a list of all your debts, credit card balances, account numbers, loans and obligations. It will also contain the current balances on each account and your average account balances for the past six months. It will be printed on an official letterhead and contain banks contact information.
Proof of funds for home purchase – this kind of proof of funds assures the seller of a house or piece of property that you have the money required to purchase a house. The seller will often hold on to the proof of funds document as they wait for the transaction to close and complete payment for the transaction. We provide proof of funds for home payments so the seller can be certain you are able to complete payments and finalize the transaction. This way they do not lose out by taking the property off the market and facing setbacks when clients do not close on the purchase and you get to buy yourself some time on a transaction.
Proof of funds letter – this kind of proof of funds is required by a bank and is used to verify that you do have the funds you claim to have. A proof of funds letter includes an official bank statement, name and address of the bank, a copy of the balance and money market statements, the total balance of money in your savings and checking account, a certified financial statement, a copy of your banking statement and an authorized signature from a bank employee. This can help you verify that you have easily obtainable funds and give your financial standing a leg up or give you more time to process a transaction. Proof of funds are also sometimes referred to as “leased funds”