What is letter of credit (lc)?
Letter of Credit (LC): A bank's written promise to pay a supplier when documented conditions are met.
How it works
Common in international sourcing. Your funder issues an LC to your overseas supplier; when the supplier ships and presents documents proving compliance, the bank pays. Reduces the supplier's risk and lets you buy on better terms without wiring cash upfront.
Where you will run into it
Letter of Credit (LC) comes up most often in purchase order financing conversations. See how purchase order financing works, including real cost ranges and timelines.
Letter of Credit (LC) questions
A bank's written promise to pay a supplier when documented conditions are met.
Common in international sourcing. Your funder issues an LC to your overseas supplier; when the supplier ships and presents documents proving compliance, the bank pays. Reduces the supplier's risk and lets you buy on better terms without wiring cash upfront.
Funding Requirements Checklist for US manufacturers
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