Financely provides sophisticated solutions to monetize your Standby Letter of Credit (SLOC). We offer up to 90% Loan-to-Value (LTV), turning your financial instruments into immediate cash flow. Our expertise extends to monetizing SLOCs, Back-to-Back LCs, and Red Clause LCs, including those from non-rated banks.
How SLOC Monetization Works
SLOC Monetization involves converting a Standby Letter of Credit into liquid assets. This process is ideal for businesses needing quick access to cash, using their existing financial instruments. Financely guides you through each step, ensuring maximum value with minimal hassle.
Our Monetization Process
Setting Up the SPE
- We begin by establishing a Special Purpose Entity (SPE). This entity is crucial for handling and managing the financial transaction, offering enhanced security and transparency throughout the process.
Executing the Collateral Management Agreement (CMA)
- Next, we formalize the terms with a Collateral Management Agreement (CMA). This document outlines the transaction’s specifics, including responsibilities, obligations, and intended use of funds.
Review and Evaluation
- The SPE’s bank thoroughly reviews the financial instrument and the underlying transaction. Based on this evaluation, we provide a detailed quote specifying the LTV, interest rate, and default terms.
Funding Release
- Upon mutual agreement, the funds are deposited into the SPE’s account. These funds must be utilized as per the terms outlined in the CMA.
Instruments We Monetize
- Standby Letters of Credit (SLOCs)
- Convert your SLOCs into cash, leveraging up to 90% of their face value.
- Back-to-Back LCs
- Use one LC to secure another, creating a strategic liquidity stream.
- Red Clause LCs
- Obtain upfront advances through Red Clause LCs to finance your obligations promptly.
Key Considerations
Minimum Transaction Size
- Financely handles transactions starting at $5,000,000, ensuring sufficient scale for significant liquidity.
Retainer Fee
- A $150,000 one-time retainer is required for setting up the SPE, covering the costs of structuring and execution.
Tailored Evaluation
- Each transaction undergoes a rigorous assessment to ensure that the underlying assets and transactions are sound and meet all compliance standards.
Purpose-Driven Funding
- Funds are released with the clear stipulation that they be used strictly for the intended purposes as defined in the CMA.