A bank comfort letter is a document issued by the bank on its customer’s (buyer) behalf to a supplier, assuring the supplier of the buyer’s financial ability and legitimacy in maintaining a continuous business. It is important to note that a bank comfort letter does not confirm the payment but guarantees the seller of the buyer’s stability to fulfill its promise in conducting the business. Bank issue the bank comfort letter to the supplier as confirmation of the buyer’s ability and this is accompanied by a sales and purchase agreement or purchase order.
A bank comfort letter gives assurance to the lender in the purchase of large commodities or goods or loans from its customer (borrower). In the event of the credit loan facility failing to provide a bank comfort letter on their customer’s behalf at the initial stage of purchasing the goods/ mortgage, the supplier/ tender will experience the inability of the buyer/ borrower to meet all financial needs. In such a case, the supplier/lender may reconsider an agreement with the buyer/borrower.
We are a major financial instrument service provider. We have extensive experience in receiving bank comfort letters on our client’s behalf. We provide easy and simple bank comfort letter services to help you receive your bank comfort letter quickly.
How A Bank Comfort Letter Works
The purpose of a bank comfort letter is to assure a third party to a seller generally that the borrower has access to substantial financial resources to complete the transaction, like the purchase of goods. The confirmation letter sometimes referred to as the letter of comfort is not a payment guarantee, but merely an assurance to pay the borrower’s financial resources.
The bank comfort letter usually requires the signature of the bank or financial institution representatives that are authorized to issue such correspondence.
Since a confirmation letter is issued in relation to a particular transaction, it is not transferable to a separate transaction or project. If the customer of the bank decides to enter into a different deal or purchase, the customer usually needs to get a new comfort letter.
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For instance, if a potential home buyer decides to buy a different home than the one specified in the bank comfort letter: A new bank comfort letter will be needed.
Regulations may vary from country to country as to whether and to what extent the confirmation letter should specify the specific purpose for which the loan or line of credit is being given to the borrower.
Process Of Bank Comfort letter
We provide a bank comfort letter on the behalf of client’s company to present their financial capability to purchase goods.
- First, the buyer needs to submit the request with ICPO, Pro-forma offer, FCO, or contract of sales of their business deal.
- After that, Taskmaster would perform an explication of the business project between the seller and buyer. And informing the parties regarding whether their bank comfort letter is approved or rejected.
- After the process of the bank comfort letter approval, the buyer requires to sign an agreement of service. And also, they require to make payment of the service fees for starting work for their transaction.
- When getting the charges of service, we would like to start the process of their request for the bank comfort letter with our bank by our bank limit blocking.
- Apart from this, we would like to send the draft copy of the bank comfort letter to the customer for review, we would also give information to our clients about the bank comfort letter issuance charges.
- On the receipt of regarding documents, format copy that is approved, and the amount. We would work with our bank to offer a bank comfort letter.
Cost Of Bank Comfort Letter
The cost of a bank comfort letter typically involves the issued amount, advising fee, and fees of transmission. All the payments must be covered by those who applied and make payments to the bank. In addition, these are all things mentioned in a comfort letter.
If you require the bank comfort letter from a bank without promising any type of cash collateral. Then you can contact us, we have years of experience in trading and we know the challenges that suppliers or buyers often face. We offer bank comfort letters from top-rated banks.