Standby Letters of Credit

Standby Letters of Credit are used for a variety of transactions with third parties. Because the Bank is rated AAA, using letters of credit may result in a AAA-rating on the issuance of commercial paper or medium-term notes, reducing financing costs. You can tap letters of credit to support a variety of community lending purposes, from refinancing an apartment complex for low-income seniors and people with disabilities to financing SBA loans.
 
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Use of the Standby Letters of Credit for community lending purposes require compliance with all Community Investment Cash Advance (CICA) policies, regulations, obligations, and procedures. If the Bank determines that a participating member has not complied with the qualifying terms of the program or has not provided acceptable documentation to verify compliance, the Bank may change the pricing on each outstanding letter of credit, retroactive to its issue date, to the pricing in effect on the issuing date for a comparable letter of credit under the Bank's regular credit programs. The Bank monitors all use of the CICA letters of credit, including at time of application and term of the credit to ensure that the letters of credit is used appropriately.


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