The Wholesale Forums

[skyline]

What exactly is the difference between a BCL (Bank Comfort Letter) and a LOC (Letter of Credit) issued by a bank for wholesale transactions?

I've been asked this several times, and I can't really find a definitive answer online as to what the difference is exactly.

I've heard that a BCL is much easier to get, whereas a LOC requires a lot of paperwork but is more authoritative.

Thanks!

[Titchimp]

well id id a google define and it came up with Bank credit letter for BCL so i imagine thye are the same

[taabish]

A letter of credit is a method of payment, whereas a BCL is just a letter from the bank endorsing the fact that you have the necessary funds available for said transaction.

[BaiLong11]

Investopedia.com gives this definition of a LOC:

What Does it Mean?
A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer is unable to make payment on the purchase, the bank will be required to cover the full or remaining amount of the purchase.
Investopedia Says...
Letters of credit are often used in international transactions to ensure that payment will be received. Due to the nature of international dealings including factors such as distance, differing laws in each country and difficulty in knowing each party personally, the use of letters of credit has become a very important aspect of international trade. The bank also acts on behalf of the buyer (holder of letter of credit) by ensuring that the supplier will not be paid until the bank receives a confirmation that the goods have been shipped.

Hope that helps

[skyline]

Thanks =)
I'm a little closer to an understanding...
I'm still having a hard time getting our bank (BofA) to see the difference though

[JMGames]

LOC (Called LC or L/C) is basicly the equivalent of a Credit Card Payment

BCL is just a letter from the bank saying you have $xxxx.xx in your account available

[bhsizemo11]

Most people that work at the bank won't even recognize the terms as they don't receive training on them. Normally, only talking to the business banking "manager" will know how to do either one. Chances are that your personal banker won't have a clue. An L/C is a payment type, whereas a BCL just states a certain amount of funds are available in your account on that day - just as John states above.

L/C example: http://www.offer21.com/payment.php
BCL example: http://www.prestigeit.com/bankcomfortletter.htm