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Explanations of Common Financing Jargon

Letters of Credit

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Letters of Credit (referred to as “LCs” or “LOCs”) are commonly used by borrowers to enhance the collateral used to secure a loan, and by businesses involved with international trade to guarantee payment for goods and services.

Justin Pritchard at About.com wrote a brief but helpful explanation of letters of credit on his blog.  Link to Justin’s blog: http://banking.about.com/od/businessbanking/a/letterofcredit.htm