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A Letter of Credit helps Nigerian businesses buy and sell goods safely across borders by having a bank guarantee payment. When you're importing machinery or exporting agricultural products, this document promises that the bank will pay the seller a specific amount once they prove they've shipped the goods correctly.

Under Nigerian banking regulations and the Uniform Customs and Practice for Documentary Credits (UCP 600), these letters protect both buyers and sellers from trade risks. The Central Bank of Nigeria requires commercial banks to issue Letters of Credit for certain import transactions, making them essential tools for international trade deals worth over $10,000.

Use a Letter of Credit when selling goods to new international customers or buying high-value items from overseas suppliers. This protection becomes crucial for Nigerian businesses dealing with transactions over $10,000, especially in sectors like oil and gas, agriculture, or manufacturing where payment risks run high.

The Central Bank of Nigeria requires Letters of Credit for many import transactions, particularly those involving machinery, raw materials, or bulk commodities. They're especially valuable when dealing with unfamiliar trading partners, entering new markets, or when local regulations in either country demand secure payment methods. This safeguards your business interests while ensuring compliance with Nigerian trade laws.

• Lc 90 Days Payment Terms: Standard commercial LC giving buyers 90 days to make payment after document presentation, popular in Nigerian manufacturing and bulk commodity trades
• Credit Card Increase Limit Letter: Special variation used when banks need to adjust credit limits within an existing LC arrangement, common in ongoing trade relationships

• Commercial Banks: Issue Letters of Credit and verify documentation, acting as trusted intermediaries between buyers and sellers under CBN oversight
• Importers: Apply for LCs through their banks to secure international purchases, providing collateral and specifying trade terms
• Exporters: Receive payment guarantees through LCs, ensuring they get paid once shipping documents meet specified requirements
• Customs Officials: Review LC documentation during import clearance to verify compliance with Nigerian trade regulations
• Trade Finance Officers: Handle LC processing, document verification, and ensure compliance with UCP 600 rules

• Trade Details: Gather complete information about goods, pricing, shipping terms, and payment conditions from both parties
• Bank Requirements: Check your Nigerian bank's specific LC requirements and collateral needs based on transaction value
• Documentation: Prepare import/export licenses, bills of lading, insurance certificates, and commercial invoices
• Compliance Check: Verify transaction against CBN foreign exchange policies and FORM 'M' requirements
• Draft Review: Use our platform to generate a compliant LC draft, ensuring all mandatory elements meet UCP 600 standards
• Timeline Planning: Set clear expiry dates and presentation periods that work for all parties

• Identification Details: Full names and addresses of applicant, beneficiary, and issuing bank
• Credit Amount: Specific currency and value, stated both in numbers and words
• Expiry Details: Clear expiry date and place for document presentation
• Payment Terms: Precise conditions for payment, including required documents and timeline
• Goods Description: Detailed specification of merchandise, quantity, and unit prices
• Shipping Terms: Port of loading, destination, and latest shipment date
• Governing Law: Reference to UCP 600 and Nigerian banking regulations
• Authentication: Authorized bank signatures and official stamps

Letters of Credit differ significantly from a Credit Agreement in their purpose and application within Nigerian banking law. While both deal with financial obligations, they serve distinct functions in business transactions.

• Payment Guarantee: Letters of Credit provide immediate payment security for specific trade transactions, while Credit Agreements establish ongoing lending relationships
• Bank's Role: In LCs, banks act as independent guarantors who pay upon document presentation. In Credit Agreements, they're direct lenders with more extensive monitoring rights
• Duration: LCs typically cover single transactions with fixed expiry dates, whereas Credit Agreements often establish longer-term lending facilities
• Documentation: LCs require specific shipping documents for payment release, while Credit Agreements focus on financial covenants and repayment terms
• Regulatory Framework: LCs follow UCP 600 rules and CBN trade guidelines, while Credit Agreements align with Nigerian banking and contract laws