Commercial Letters of Credit at Old National Bank

Old National Bank's Commercial Letters of Credit are designed to provide importers, exporters and their trading partners with a reliable, bank-backed payment mechanism that supports international and domestic trade with confidence and clarity. Whether you are managing cross-border shipments, securing long-term supply contracts, or optimizing working capital, our Letters of Credit (LCs) deliver a structured financial guarantee that helps reduce counterparty risk, streamline cash flow and keep business moving.

What is a Commercial Letter of Credit?

A Commercial Letter of Credit is a commitment issued by a bank on behalf of a buyer (applicant) to pay a seller (beneficiary) a specified amount, provided the seller presents the documents required by the LC and meets the terms and conditions set forth. It is a documentary instrument that separates the creditworthiness of the buyer from the shipping and contractual performance of the seller, creating a secure bridge for the exchange of goods and services.

How Old National Bank Supports Your Trade

At Old National Bank, we combine specialist trade expertise with personalized service to structure LCs that match your commercial needs. From advising on suitable LC types and drafting precise document requirements to confirming payment arrangements and coordinating with advising banks, our trade specialists work with you at every step to reduce delays, avoid discrepancies and protect your commercial interests.

Key Benefits

• Payment Security: Payment is made upon presentation of compliant documents, providing sellers with a reliable guarantee and buyers with assurance that terms are met.
• Risk Mitigation: LCs reduce the risk of non-performance and default by linking payment to documentary proof rather than trust alone.
• Improved Credibility: Backed by a recognized banking institution, an LC strengthens your standing with suppliers and buyers, often enabling better commercial terms.
• Flexible Structures: Choose from sight, deferred payment, usance, transferable, or revolving LCs to accommodate specific transaction needs.
• Working Capital Management: Structured LCs can support cash flow planning and financing arrangements linking trade and treasury operations.

Types of Commercial Letters of Credit

Old National Bank offers a range of LC structures tailored to different trade scenarios:

• Sight Letter of Credit: Payment is made immediately upon presentation and verification of compliant documents.
• Usance / Deferred Payment LC: Payment is due after a specified tenor, helping buyers manage payment timing while sellers receive bank assurance.
• Confirmed Letter of Credit: Adds an additional layer of commitment by a confirming bank, often used in higher-risk markets.
• Transferable LC: Allows the beneficiary to transfer all or part of the credit to another party, useful for intermediaries and trading houses.
• Revolving LC: Designed for repeated shipments under a single LC, improving efficiency for ongoing supply relationships.

When to Use a Letter of Credit

A Commercial LC is appropriate when parties require a formal, bank-backed assurance of payment — for new trading relationships, high-value transactions, sales into unfamiliar markets, or when buyers and sellers have differing credit profiles. It is especially valuable for complex supply chains and cross-border commerce where documentary proof of shipment, insurance, and compliance are essential.

Process Overview

Our standard LC process is straightforward and client-focused:

1. Consultation with a trade specialist to define transaction terms and LC requirements.
2. Issuance of the LC in accordance with the buyer’s instructions and applicable international rules.
3. Advising and, if requested, confirmation by a correspondent bank to the seller.
4. Presentation and examination of required documents by the issuing/advising bank.
5. Payment or acceptance upon presentation of compliant documents, or negotiation/discounting where applicable.

Documentation and Compliance

Precise document preparation is essential for successful LC transactions. Typical documents include the commercial invoice, transport documents (bill of lading, airway bill), insurance certificate, packing list and any certificates required by contract. Our trade operations team provides guidance on documentary requirements and assists in reducing discrepancies that could delay payment. We also ensure that all transactions comply with applicable trade regulations, sanctions screening and international banking practices.

Risk Management and Financing Options

Old National Bank supports you beyond issuance. We offer advice on confirming, discounting or negotiating LCs to accelerate cash receipts, minimize exposure and optimize financing costs. Coupled with robust risk screening and tailored collateral arrangements, our solutions help you manage credit exposure while enabling growth in new and existing markets.

Why Choose Old National Bank for Your Letters of Credit?

• Expertise: Dedicated trade finance professionals with extensive experience in documentary credits and cross-border transactions.
• Personalized Service: Customized structuring and clear documentation to align with your commercial objectives.
• Operational Efficiency: Streamlined processes and proactive communication to minimize delays and discrepancies.
• Global Reach: Coordinated correspondent relationships to facilitate advising, confirmation and settlement worldwide.

Getting Started

Initiating a Letter of Credit with Old National Bank starts with a consultation to assess your transaction needs and identify the optimal LC structure. Our team will guide you through the documentation requirements and timelines, ensuring a clear pathway from issuance to payment. For businesses engaged in regular trade activity or one-off international deals, our commercial Letters of Credit provide a reliable framework that protects commercial interests and enables confident trading.

Trust Old National Bank to be your partner in trade — delivering secure, practical and tailored Letters of Credit that keep commerce flowing and risk managed.

Address Bank: Chicago, Illinois Evansville, Indiana, U.S.
Bank: Old National Bank
Headquarters: Evansville, Indiana
Products: International & Trade
Type: Commercial Letters of Credit