BANK INSTRUMENT LEASING- THE TRUTHS AND THE LIES (Hong Kong)
Yiu Fung Finance Company Ltd is a leading Financial Services provider that is headquartered in Hong Kong to provide Non Recourse Loans, Business Loans, SME Loan, Investment Loan, Project Financing, Bank Guarantees, SBLCs, Letters of Credit, Monetization of BG/SBLC and funding for all kinds of viable projects locally and internationally.
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Loans: (Non Recourse Loans, Business Loans, Secured Loans, Unsecured Loans, International Project Financing)
Purchase Bank Instruments (Bank Guarantees and Standby Letter of Credit)
Lease Bank Instruments (BG, SBLC, DLC, Letters of Credit)
Letters of Credit (DLC, L/C, Usance LC)
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Insurance Underwriting Services
PPP and Trading Platforms
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There are so many myths and fables about leasing bank instruments that there is no place to begin. So let’s begin with the basic truthful tenants.
First, no one is going to back the issuance of a bank instrument (provide collateral), and allow you to borrow against it without knowing AND approving the use of the borrowed funds. The Applicant is going to be very careful and learn ALL the risks of your loan not being timely repaid before he will lease you the instrument. The reason for this is that the party backing the instrument (called “the Applicant”) is not stupid enough to take a small lease fee in exchange for losing the face value of the instrument upon your default of the loan (or guarantee) taken against it.
Here are some examples that will often work when leasing an instrument:
Commodities Trading: Use instrument as a guarantee to guarantee purchase and payment pending completion of sale and resale by the purchaser-lessee. On resale of the commodities the risk of the Applicant is eliminated by payment to the Seller from the proceeds of the resale by the purchaser-lessee.
Commodities Trading: Funds borrowed against leased instrument are used to pay Seller, and Applicant is paid and risk eliminated on resale of commodities to third party.
Real Estate Transactions: Leased instrument is used as a guarantee to “hold” a purchase pending obtaining financing. Once financing is obtained, Applicant has no further liability.
Purchase of a Business (securities): Leased instrument is used as a guarantee to “hold” a purchase of stock pending obtaining financing. Once financing is obtained, Applicant has no further liability. Financing is often easily obtained when Lessee has a buyer.
Purchase of a Business (Assets): Leased instrument is used as a guarantee to “hold” a purchase of assets pending obtaining financing. Once financing is obtained, Applicant has no further liability.