Surety Bonds

[mari]

I HAVE A question, i'm thinking about applying for a broker authority, and someone advised me to get a letter of credit from my banker, instead of coming up with $10,000.00 for the bond, would this be a good idea.:

[bondman]

I HAVE A question, i'm thinking about applying for a broker authority, and someone advised me to get a letter of credit from my banker, instead of coming up with $10,000.00 for the bond, would this be a good idea.:

Depends on what collateral the bank will want and how much they will charge to issue the L/C.

[don jipping]

generally banks will require the full 10k on deposit in a CD with them. Then they will issue a letter of credit backed by the CD. Keep in mind the bank will have a fee to issue letter of credit, rule of thumb is 2-3% of the amount. Some of the major banks will have a minimum charge of $500.
Shop around for the best terms on both interest rate on CD and fee to issue LOC. My clients have found that the smaller or newer banks in town will have the better rates. (remember, they WANT your business)
I think the letter of credit is an excellant way to secure your bond or trust fund.

I am assuming this is for a freight broker, if so please read posts related to ICC

Thanks,

Don Jipping