Explanations of Common Financing Jargon
Letters of Credit
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