Letter of Credit (LC)

Letter of Credit Sample

A letter of credit is an official document which is issued by a company or business to assure another party (seller, vendor) that the goods or services have been received and soon the buyer will pay the amount he owes in return of that services or products. This is a document that proves that the seller or manufacturer has finished his services or deliveries according to the mutual agreement and now he deserves to be paid as soon as possible and he definitely will be. Although sometime the purchaser can’t arrange for the money right away, so he writes this letter of credit to the other party to ensure that he is soon going to pay the money he owes. This is the same letter that serves as a guarantee to the seller and if he doesn’t get his money, he can sue the purchases in the court on the basis of this letter.  This letter also serves as evidence that all the delivered services or products meet the standards according to the agreement and the seller or vendor has done his part.

There are various types of letters of credit but some of them are more important. When a company sends a letter of credit, it could be of one kind of more than one kind at once. This all depends upon the present situation of that time. The common types of letters of credit are:

  • Unconfirmed
  • Confirmed
  • Irrevocable
  • Revocable
  • Transferable
  • Stand-by
  • Back-to-back
  • Revolving

The main advantage of the letter of credit is that it ensures the seller that he is going to get his money without any risk of loses. When the seller and purchaser are in different countries and the same laws can’t apply on both of them at the same time, this letter is the most powerful document in the business world that can be challenged in almost every country and court in the world. In case a bank or number of banks is also involved in the deal or agreement, the risk of non-payment is transferred to the bank(s). Although when you involve a bank in the contract, it may charge you some extra money for issuing the letter of credit. On the buyer side, this letter is also very important as with issuing this letter, the buyer ensures that he won’t be asked for the payment before time as per the contract.

How to write a Letter of Credit:

  • Before you write the letter, make sure that you are addressing to the right person and sending it to the correct department. All the companies have websites from where you can find addresses and in case it’s not possible, call that company and ask about the person and department who deal with the credit issues.
  • At the top of the letter, put your name and contact addresses such as phone number and mail address so that there is no complication to contact you.
  • In the very beginning of the letter, explain the reason of the letter and what type of issues you are having in this process.
  • If you have sent a letter before and this is your second or third letter, provide the reference number of the previous letter(s).
  • Attach the credit report with your letter which indicates the amount that company owes you. If they have made some previous installments, include that information too.
  • If you have an account in that company or some reference number to the mutual agreement, provide it too. This makes it easy for that company to immediately recognize you and collect all the information and documents of your deals and agreements.
  • Finish the letter with a hope that the company will soon respond to your request and will make the payment as soon as possible. Put your full name and signature at the end and close the letter.

Letter of Credit Sample

Here is preview of this Sample Letter of Credit created using MS Word,

Letter of Credit (LC)

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Sample Financial Letter

A financial letter is a letter related to money and its transactions and deals with the finance related problems. A financial letter is created for a number or purposes which includes both financial and account related issues. A firm issues a financial letter to get financial aid from a bank, organization or corporate firm when it’s having problems regarding finance or just going to be bankrupt. In simple words it’s a letter for help to support the business and to survive in the market. In this letter they list their problems, the amount of money they need and the rules and regulations to make this deal. This will remove any possibility of conflict or dispute in the future. This is the same letter which is written by an individual student to an institute to support him by allowing an allowance or scholarship to support him for the studies.

Secondly when a company wants to allow some financial aid to a specific department inside the firm, management issues a financial authorization letter which goes into the financial department and starts the procedure for the aid. Its sounds an extra thing inside the company but it’s a necessary procedure when it comes to a huge multinational company which has branches in different cities or countries. This letter also includes the department’s name, its needs and the main purpose of the aid and the rules and regulations to spend the money. This allows the company to keep a record of financial expenses and the departments which will need money in the future. This is the letter which is also serves as an authorization letter for a division which allows the division to use financial resources of the company for a project or to create a new product.

Here is preview of a Sample Financial Letter created using MS Word,

Financial Letter

General guide lines to create a financial letter:

  • Start the letter with a proper salutation and the correct name and department of the person you are writing the letter to. This is the first thing that a superior will see so it has to be enlightened. Address the person with “Sir” or “Mr.”
  • After that you write the body of your financial letter in which you discuss your situation thoroughly and explain the problems you are having. At this point you also discuss the reason of writing this letter to the recipient and your concerns about that firm or institution.
  • After that you present the possible solutions of your problems and the terms and conditions you are comfortable working with. This will make your point clear and help the recipient to come up with the conclusion easily.
  • Here you just add short paragraph about the above mentioned factors and close the letter. Although you have explained all the things already but that is consist of dense and long paragraphs which make it difficult for the reader to realize the main theme of the words.
  • Close your letter with a greeting such as “Regards” or “Sincerely yours”. This will leave a positive impact on the reader’s mind and he will think of you as a civilized and well-mannered person.

Here is download link for this Sample Financial Letter,

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Sample Request Letter for Credit Limit Increase

When a bank or credit card company issues a credit card to an individual, there is a certain credit limit on the card. For example, a client has the credit limit of $50,000 per month where another client has the credit limit of $100,000 per month. This depends on the Credit Card Company and income of the card owner. It is possible that a client is using a credit card with small limit but as his income increases, so does his expenses increase and he will require the company to increase his credit card limit. The request letter for credit card limit increase is a formal request letter sent to the bank or credit card Company asking them to increase the credit limit on a certain credit card.

Brief description of request letter for credit limits increase:

Initially when a bank issues a credit card to a client, the credit limit is kept lower so that the bank can evaluate if the client will make the credit card payments on time or not. Once there is trust in the relationship, banks and credit card companies accept the offers to increase the credit card limit but the clients are required to make formal request to the bank. The request letter for credit limit increase is a very common and professional way of making this request and letting the bank know that the client wants to increase the credit card limit.

Sample Request Letter for Credit Limit Increase

To: senior manager

National Capital bank, main branch

New York NY 35094

Subject: credit card limit increase

Date: 21 January 2015

Dear Sir,

I am using the credit card issued by your bank for more than 2 years and as I have attached the payment schedules with the letter, you can see that I always make the credit card payments on time and without any delay. I am discussing this only to let you know that I am a reliable and well-reputed client and you can consider the request that I am about to make.

In last six months, I have expended my business and as compared to before, now there are dozens of additional expenses that I have to make every month that require extra credit on the card. I have also applied for another card in your bank but the manager said that I will take a month or 6 weeks at least to process the application and issue the card and I don’t have that much time.

So, as the second option, I am writing this formal request letter to you in order to increase my credit card limit. Currently I have credit limit of $60,000 per month and I want to increase it up to $130,000 per month.

I am sure that you will consider my request with respect and initiate the process as I need this increase on urgent basis. I have attached the additional expense details and cash flow of my business with this letter and if there is something else that you need, just let me know.


John K. Foreman

Credit card number: 860-4501947-10389-1093


Application Letter for New Mortgage Loan

A formal letter that is written by individuals or companies and corporations to bank managers in order to ask them to provide a mortgage loan is known as the application letter for new mortgage loan. This letter is different from the simple loan request letter. In most cases, this request letter is addressed to the bank manager or branch supervisor but you can also write the letter without addressing anyone and the bank will refer the letter to whomever it may concern or to the person in charge of mortgage loan plans.

Brief Description of Application Letter for New Mortgage Loan:

There are many times when individuals and companies need urgent cash or money and they can’t find it from any friends or partners so banks come in for help. If you are good and reliable citizen, you can ask banks for loans. Many people make the mistake of resembling the mortgage loan letter with simple loan letter but they are different. The simple loan letter is just an application to get some loan without pledging any property or shares with the bank where the mortgage loan application asks the banks to take a look at the property and decide how much loan they can issue on mortgage.

Most people take only one mortgage loan on their properties but if they are paying their installments on time and schedule, they can also get a second mortgage on the property from the same bank or another bank depending on the situation and bank policies. Also, the mortgage loan application takes more time as the bank has to evaluate the mortgage property first and then prepare a statement of how much loan it can provide to the client. This is why if you are asking for mortgage loan, you need to send the application 2 to 3 weeks before you actually need loan money.

Sample Application Letter for New Mortgage Loan:

To: senior manager

National Capital bank, main branch

New York NY 35094

Subject: mortgage loan information

Date: 19 January 2015

Dear Sir,

I am regular customer of your bank and I have two accounts in your bank where my salary and other payments are transferred every month. With my accounts’ details, you can see that I always keep good amount of cash in my account so that proves that I won’t be a liability for your bank if you issue loan to me.

I have attached the details of my property/shares or stocks that I want to pledge with your bank for mortgage loan. Kindly consider my application and start the process as soon as possible so that you can evaluate the worth of property and issue the loan.

I have also attached testimony or insurance of two of my neighbors that will also act like my guarantors in this case. You can also talk to them and make the decision as soon as possible because I need the loan money without 15 days or less.

I hope you will consider me as a valuable applicant for this mortgage loan request.


Thomas John

Account number: 98-23597-028470-112-1