Replies to post #15057 on The Jailhouse (JAIL)

[HotrodHans2]

oh choooo rag....yoo hooo...hey fella...

NICE POST!

maybe I was wrong, you might know something about counting beans.

Keep it up...this is better than the bitter ones posts and appreciated. Now, if you repeat it 17 times a day, we have a problem.


So, do I read this correctly then, that EDIGs' letter of credit is a good thing for them?

Posted by: Churak
In reply to: jwperk1 who wrote msg# 34260 Date:4/5/2003 2:52:24 PM
Post #of 34284

Actually you are both wrong. Lines of credit are extended to companies and/or individuals who are typically credit worthy. They may be secured or unsecured. In fact, I have seen lines of credit extended to non-credit worthy people/companies if they are fully secured. Company A wants a $100,000 line of credit. Company B, perhaps their supplier, will either guarantee the line of credit or put up enough collateral security that the lending institution looks beyond to whom the line is extended to but rather to the underlying security. In Canada, if you declare bankruptcy & then are discharged from same & want a credit card with a $5,000 line of credit, it is not uncommon for the lending institution to ask for $10,000 of hard security ie cash for a credit card with a $5,000 limit. The bankrupt person gets their credit card with a line of credit of $5,000 & the bank is secured.

With respect to a letter of credit, typically these are provided only to the most credit worthy of customers. Company A wants to buy some widgets from China. The supplier wants to be sure that they will be paid. So the supplier asks for a letter of credit that they can draw upon after certain terms & conditions are met. The bank issuing the letter of credit on behalf of their customer typically treats letters of credit as a facility as part of someone's line of credit. For example, based on the credit worthiness of a customer, the Bank may decide to extend them a $1,000,000 operating line of credit. As part of this line of credit, the customer tells the bank that he needs a facility for letters of credit to purchase goods for resale or further manufacture. Bank says how much do you want? Customer says, $200,000. Bank says OK, you got the facility but your line of credit will be reduced accordingly by the $200,000 letter of credit facility.

There are some very creative variations of the above theme.

Anyhow, that has been my experience.


HotDick4U.

EDIT: With posts like that you might get #25.