In a very Simple term, Letter of Credit is a guarantee Letter for International payment which is secured by and between banks (Sometimes a few big International NBFC or Financial Companies also can play this Part). This Letter is released by  one bank to another Bank of One international business to another international Business. So In a simple term Letter of Credit is a kind of Bank Payment Assurance against some terms and conditions to International Merchants.

It is always need to remember that Letter of Credit is a negotiable instrument so the money will be released to some one or a bank nominated by the beneficiary and as it is a transferable instrument (sometimes) it could be assign to another entity.

It totally depends on your bank and your business types it could generally take between 2 to 15 business days and the discounting could matter on the date of validity.

There are a few kind of letter of Credit , although in Fair Finance we do deal with these kind of Letter of Credits : Commercial, Export / Import, Transferable and Non-Transferable, Revocable and Irrevocable, Stand-by, Confirmed, and Unconfirmed, Revolving, Back to Back, Red Clause, Green Clause, Sight, Deferred Payment, and Direct Pay LC

Bank Guarantee is an Assurance by the bank of definite payment upon fulfillment of certain conditions by one party of a two or multi party contract. LC may be considered for an advance as an instrument but Bank Guarantee is non negotiable and cannot be used as collateral for an advance of money from a bank (although in Fair Finance we do take bank Guarantee as a collateral). 

This is a very difficult question to answer in a single kind of figure as it depends on the kind, amount and merchants so you need to do consult case to case.

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