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Trade Finance Services-

Documentary Letter of Credit

Stand By Letter Of Credit

Bank Guarantees

POF & RWA Messages


International Trade Finance

MG Capital Group works directly with the premier provider of financial instruments in trade transactions. We provide facilities like Documentary Letter of Credit (LC), Standby Letter of Credit (SBLC), Bank Guarantees (BG), and other Pre-Advice Messages. Our expertise to understand your complex trade transactions ensures that you get the optimal solution for your business requirement – be it for import, export, or local projects. We serve clients worldwide. Our clients are usually trading companies and importers who want to take charge of their liquidity and avoid the bureaucratic process and documentation that traditional providers have.

We assist in

Our services are tailor-fit to each client’s requirement. The management’s extensive years of experience in the industry as a trade solution provider coupled with a strong network of alliance banks and financial institutions will make your global deals happen in no time.

We aim to provide our client what they need to push their transactions with competitive charges, and most important of all, without long process. This approach has made us one of the most reliable and trusted names among providers of trade finance services.

Documentary Letter of Credit
Stand By Letter Of Credit
Bank Guarantees
POF & RWA Messages
Documentary Letter of Credit

Finance your Trade via Documentary Letter of Credit

A documentary letter of credit is a guarantee that provides assurance to the beneficiary that he will get the payment which has been mentioned in the documentary letter of credit. There is a condition that the compliant presentation should be under the documentary letter of credit. This documentary letter of credit is commonly used for international transactions where both the buyer and the supplier have a new relationship and operate from different countries.

A documentary letter of credit is a really crucial financial instrument for meeting the short-term needs. It enables the recipients for obtaining the important credit for financing the project. The recipients hope of getting sufficient return for settling the due amount in the provided time frame.

The documentary letter of credit showcases the documents and information that are needed by the beneficiary on presentation which includes the expiry information like date and time of the letter. The compliant presentation is a kind of guarantee given to the beneficiary by the documentary letter of credit for in order to get paid. The only criterion is that the delivery conditions should be met.

It is the responsibility of the bank that writes the letter of credit on the applicant’s behalf to ensure that the terms and conditions which are required for documentation purposes under the credit are met duly before any amount is paid to the supplier. Documentary letter of credits come under the governance of the International Chamber of Commerce (ICC) rules. These rules for the letter of credit are known as Uniform Customs and practice for documentary Credit (UCP). The current version which is in effect is the UCP600 from July 1st, 2007. The concerned parties to a documentary letter of credit are the issuing bank and the beneficiary.

In these cases the credit worthiness of the issuer stands in place of the credit worthiness of the buyer – giving the supplier greater comfort that he will be paid.

Stand By Letter Of Credit

Finance your trade via Stand by Letter of Credit

A guarantee issued by a bank or a financial institution to pay a beneficiary on a client’s 
behalf in a situation where the applicant defaults, is known as a standby letter of credit.
 This was developed as a consequence of legal limitation put by the US regulator on the
 bank’s authority for issuing guarantees.

A standby letter of credit is considered quite suitable for a wide range of secure 
payments making it quite a flexible tool. Most commonly, it is used for international 
trade purposes for providing assurance to the party that it will receive the payment 
whatever the case it. Having said this, there are quite a few complexities involved in a 
standby letter of credit. This suggests that it is necessary to have a consultation with 
an expert in case complete information is not available regarding the procedure.

There are certain types of a standby letter of credit which are mentioned below:

  • A direct-pay standby
  • A performance standby
  • A bid-bond or tender-bond standby
  • An advance-payment standby
  • A financial standby
  • A counter standby
  • A commercial standby
  • An insurance standby
Bank Guarantees

Finance your trade with a Bank Guarantee

A promise made by the bank for meeting the liabilities of a debtor when a person fails to fulfill his contractual obligations. There are two types of bank guarantees — Direct or indirect:

A direct guarantee is one where a bank is asked to provide a guarantee by its account holder, in favor of the beneficiary.

In an indirect guarantee, a second bank issues a guarantee in return for an already issued guarantee. When the second bank suffers losses when a claim is made against a guarantee, the issuing bank will make sure that it compensates all the losses.

Guarantees provide comfort to the beneficiary; in case the applicant fails to meet his obligations (either financially or by performance) as per the contract made between the applicant and the beneficiary, the beneficiary will have the guarantee to turn to for payment.

Having a guarantee issued in support of a client’s transaction can help the client grow and expand their business by postponing current payments for goods and/or services to a later date, provide comfort to buyers, allow clients to bid on transaction , without requiring that our clients tie up their available cash.

Following are the different bank guarantee types that are available:

A Bank Guarantee is a versatile tool which can function as a number of instruments: a bid bond, a performance bond, and advanced payment guarantee, a warranty bond, a letter of indemnity, a payment guarantee, a rental guarantee, or a confirmed payment order.

  1. BID BOND is usually issued for bidders on construction or similar tender based projects. A bid bond is a debt secured by a bidder. In effect, it serves to secure the bidder’s investment in the project and to discourage bidding by less serious players. A bank guarantee could be presented as a partial alternative to the financial capital typically required by a project owner.
  2. PERFORMANCE BOND, or CONTRACT BOND is utilized in the real estate industry to make sure a contractor completes a designated project. A performance bond is issued by a bank, insurance company or a financial institution in favour of a beneficiary by order of an applicant, against the applicant’s failure to meet its obligations as per an underlying contract. A performance bond often covers 100% of the contract value and can replace a bid bond when the applicant has been awarded a contract. If effect, applicants use performance bonds to comfort suppliers who are concerned with the prospect that the applicant might become insolvent or otherwise unable to fulfil his contractual obligations. In case of insolvency of the applicant, the beneficiary receives compensation that should ease financial stresses or other damages caused by the contractor.
  3. An ADVANCE PAYMENT GUARANTEE, or ADVANCED PAYMENT BOND is an agreement where an issuer undertakes responsibility to return an advanced payment to the buyer, should the seller fail to meet his obligations.
  4. WARRANTY BOND is a contract between a project/property owner, a contractor, and a surety company. The bond promises that any defects found in the original project will be repaired during the warranty period. Frequently used in the housing and construction sector, a warranty bond guarantees an investor that a contractor will resolve all covenants that relate to materials used and work done before the warranty on the materials expires.
  5. LETTER OF INDEMNITY is an instrument guaranteeing contractual provisions will be met; otherwise financial reparations will be made. A letter of indemnity is often utilized to request replacements for lost shares from a company’s treasury.
  6. PAYMENT GUARANTEE provides the supplier with financial security in case the applicant fails to pay for goods or services supplied. Payment guarantees mitigate credit or country risk when the supplier ships the goods on an open account basis, which is to say, before receiving payment. Payment guarantees are typically issued to cover debts in cases of non-payment arising under a transaction or over a period of time. The instrument’s wording is based on the terms outlined in the original debt agreement between the applicant and the beneficiary. The applicant will make a repayment based on these terms. Sometimes a payment guarantee can be backed with collateral, such as property or asset that is pre-approved by the lender.
  7. RENTAL GUARANTEES promise payment to a landlord in case a tenant defaults financially. Since the risk of a tenant defaulting can be extremely harmful to a property owner, rental guarantees are extremely valuable tools which give security to industrial and commercial landlords.
  8. CONFIRMED PAYMENT ORDER is an irrevocable obligation to pay. In most cases, the confirmed payment order is conditional on successful completion of a project.

There are certain terms and conditions that the guarantee by the bank is subject to. This stipulates that it is mandatory for the ban to pay the beneficiary the fixed amount promised on the behalf of the client once the conditions are satisfied.


POF & RWA Messages

Proof of Funds, RWA messages, Bank Confirmation Letter (BCL)

Ready willing and able

Ready willing and able (RWA) is a document that a bank or a financial institution
issues on the clients’ behalf. The document showcases the capability and intent 
(both financially and legally) for entering into the financial transactions. 
The RWA’s are also referred to as the bank comfort letters.

Proof of funds

Proof of funds is a bank statement or a document that demonstrates that a company 
or a person has the money to finalize the transaction. The purpose of the document 
is to ensure that the financial ability that is required for the transaction is 
legitimate and procurable. The document is mostly used for funding those projects 
that require a huge amount of money for investing, often for real estate transactions.

There is a possibility that proof of funds is used by certain people that might carry
out financial scams. This makes it necessary to present with a proof of funds for 
investigating the other party thoroughly and performing diligence checks.

Bank Confirmation Letter (BCL)

We provide a bank confirmation letter (BCL) is a letter given by a bank or financial 
institution as a confirmation for a loan and also for a line of credit extended to a 
borrower. This letter acts as an official surety on behalf of a borrower that a person, 
organization, or company is eligible for borrowing a certain amount of funds for a 
specific purpose.

The bank confirmation letter provides assurance to a third party that the borrower 
has sufficient financial resources for completing a specific transaction like 
purchasing goods. Contact the trade finance experts to get the BCL today.



Specialized in cross-border transactions and with an emphasis on eliminating trade risk, we help clients for international export factoring. This financial tool helps companies accelerate cash flow, improve collections and control exposure to bad debts. By leveraging your international account receivables, you can count on having immediate access to a source of funds to accommodate your firm’s growth.


  • Certificate of Incorporation
  • Memorandum /Articles of Association & Board Resolution to verify who is the signing authority and can borrow on behalf of the company.
  • Latest Extract
  • Copies of Passports for all directors and shareholders
  • Address confirmation for all shareholders/directors
  • Address confirmation for Company (Utility or Lease Agreement)
  • TAX Certificate
  • Passport size photos for the signatories
  • Company Profile
  • Audited Financials for 2 years
  • Latest Credit Report of Company and Signatories
  • Buyers list (template provided)
  • Last Six / Twelve months company bank statements
  • Proforma Invoice/agreement


Once the shipment is ready, the seller will send the invoice and bill of lading copy via email to the lender and keep the client in copy/cc. The invoice of seller will have the lender’s account details. And there will be a separate invoice on the lender for transfer.

The lender will ask the buyer to endorse the invoice and reply back on the same email where the bank account details are for the lender. Plus they have to transfer the factoring charges to the lender directly.

After the endorsement of the invoice, the lender will request the seller to courier the bill of lading to the buyer. Upon receipt of the tracking number, the lender will disburse the funds to the seller.

On the repayment date, the buyer then will pay the lender for the shipment value.

MG Capital Funding VS Alternative Funding Sources

MG Capital Group Inc. work with trade finance and merchant banking professionals with extensive backgrounds from major financial institutions, as well as professionals from manufacturing and trading. Together we bring our combined expertise to address the funding needs of our clients, while simultaneously aiding their clients’ efficiency and profitability in their respective industries.

The limitation of Alternative funding sources

Bank financing

  • Requires a track record / audited financials
  • Financing limited to borrower’s balance sheet / equity
  • Credit limits usually too low to facilitate strong growth

Specialized Institutions

  • Not knowledgeable in trade finance
  • Take a significant portion of the business
  • Expensive

Private Sources

  • Limited growth opportunity
  • Expensive
  • Unreliable

Supplier financing

  • Puts importer / exporter at the control of the supplier
  • Possibility of leaving importer /exporter stranded
  • Supplier not as motivated to meet borrower’s needs.


  • Financing after the goods are shipped / invoiced
  • Financing is limited to the amount of the invoice
  • Does not finance purchase of goods or full trade cycle

Trading Company

  • Puts importer / exporter in a vulnerable position
  • There is a danger of being disintermediated
  • Expensive

Why MG Capital funding ?

  • Finances 100% of the costs providing unlimited growth opportunities
  • Finances based on merit of transactions irrespective of borrower’s balance sheet / equity
  • Provides transactional venture capital without borrower incurring any loss of equity
  • An independent financing source empowering borrowers to negotiate better terms with suppliers
  • Finances full cycle from purchase of goods to receivable financing
  • More flexible than other financing options
  • Experienced in all aspects of trade finance

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