Monday, August 25, 2014

A SBLC Is A Legal Alternative To Venture Capital

By Deanne Shepard


There are times when starting a company or expanding an existing one requires a large infusion of capital. One way to get needed funds is to look for venture capital. This is money put up by investors who get a share of the company in return. An alternative to giving up ownership or control is to get a SBLC, which is similar to having a co-signer for a mortgage or a car loan - but on a much grander scale.

Banks, pension funds, insurance companies, hedge funds, and individuals with practically unlimited funds make up the major players in the world of finance. Dealers at the highest level move huge amounts of money around, much of it on paper only. Those who have purely personal portfolios don't really need to understand how the top works, but it is interesting.

The acronym designates a Stand By Letter of Credit. This is a document issued by a treasury of funds - a bank, for instance - which guarantees repayment of a loan or the default penalty of a contract. The document itself is worthless; it's the credibility of the bank or other institution that is the security.

Only the soundest of companies could persuade a financial entity to back them in this way. Posts online say that this process is used rarely and that it can be a front for scammers. Other websites present opportunities for those seeking financial backing, promising that their experts can make the transaction profitable and safe.

This kind of transaction often accompanies a 'private placement' of securities. This is an 'invitation only' opportunity for large investors to buy stock, bonds, promissory notes, and such; the public at large cannot take advantage of the offering. Securities may be issued by a public company, but this 'private sale' does not come under the regulatory oversight of the Securities and Exchange Commission.

International law and regulation can make the process much more complex and increase the risk. However, there is a lot of wealth in different parts f the world, in Dubai, for instance. Dubai is an emirate - think principality - that is part of the United Arab Emirates. It's ruled by a powerful family and has virtually unlimited resources to invest or to pledge as security.

The movement of money from buyer to seller or from a contractor to contractor undoubtedly makes the world go round. However, like any other investment, it's possible to lose as well as gain. Anyone or any entity engaging in finance on this scale needs financial wizards to guard their assets.

There are offers online for those who have - or need - ten million or more dollars for business purposes. Those of us with more modest needs or much less to invest take only an academic interest in the LC. However, it would be a great plot complication for a novel featuring a rich innocent or villain, a smart financial whiz kid, and a cast of shadowy background players.




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