Letters of Credit
Forest Products Credit by AgChoice FC can provide Letters of Credit to our customer-owners to ensure their performance under a contract or agreement, or to ensure payment upon acquisition of needed services and materials.
The Letter of Credit authorizes the party selling goods or providing services (the beneficiary) to draw a sight draft or time draft on the Association for the value of goods sold or services provided or damages incurred because of nonperformance under the contract or agreement.
Letters of Credit are often requested in the following categories:
- Performance (on a contract)
- Bid bond (secure bid amounts)
- Road bond (protect against damages)
Letters of Credit are issued by AgChoice Farm Credit directly to a third-party beneficiary and are non-transferable. The Letter of Credit is supported by a committed loan or line of credit of an equal or greater amount.