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What You Need To Know About SBLC Bank Instruments Guarantee

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You don’t know what a Bank Instrument Guarantee (SBLC/BG) is or used for? Then you are at the right place where we will unfold all about it

What is a Bank Instruments Guarantee (SBLC/BG)?

A bank Instruments guarantee is a type of assurance from a Financial institution or its Mandates. The bank instruments guarantee means a financial institution ensures that the accountability of a debtor will be settled. In other words, if the debtor fails to pay a debt, the bank will cover it. A bank instrument guarantee enables the customer, or debtor, to trade and acquire goods, buy equipment or draw down a loan.

A standby letter of credit represents an obligation taken on by a bank to make a payment once certain criteria are settled. After these terms are completed and confirmed, the bank will transfer the funds. The standby letter of credit ensures the payment will be made as long as the services are performed.

Standby Letters of credit are especially important in international trade due to the distance involved, the potentially differing laws in the countries of the businesses involved, and the difficulty of the parties meeting in person. While standby letters of credit are used mostly in global transactions, bank guarantees are often used in real estate contracts and infrastructure projects.

We expose the hidden truth about SBLC/Bank Guarantee.

The biggest misunderstanding in the Bank Guarantee and Standby Letter of Credit Industry is “Banks Do Not Issue Bank Guarantees and Standby Letters of Credit” [It is completely falsehood to think that Banks Issue Bank Guarantees and Standby Letters of Credit. They DO NOT!]

I know you might be thinking its untruth and wondering that how possible is that! But its the fact! Banks DO NOT issue Bank Guarantees or Standby Letters of Credit. Let me give an explanation with a few facts so you understand!

The Bank is the suppler/Issuer not the Provider of the Transaction

accounting_bg_sblcHere is a straightforward instance, When you go to the DHL Office and you post a package, you are the Provider of the package and the DHL Office’s role is to operate a network that delivers your package to the Receiver. The DHL Office isn’t the Provider of the package, they are just the delivery system the Provider uses to send the package from the Providers location to the Receivers location.

Banks operate completely the same way with Bank Guarantees and Standby Letters of Credit! The Bank is the DHL Office and they receive a financial instruction from a Provider to deliver one of the sblc providers assets (Bank Instrument Guarantee) to specific bank of the Receiver.

The Bank is just the delivery institution who works for the Bank instruments Guarantee & SBLC Provider who is the actual asset owner, asset holder and asset controller.

General Misconception About Bank Instruments Guarantee

Most clients wrongly think the Bank is the Provider who originate and completes delivery of the Bank Guarantee or Standby Letter of Credit. This is highly FALSE! Banks Never originate a Bank Guarantee or Standby Letter of Credit Transaction. not at all! The Bank is simply the delivery institution who works for the Asset owner / Provider.

Technically speaking, “Banks DON’T issue Standby Letters of Credit” Instead, the bank is the deliverer not the originator of the transaction, they CONFIRM their client has the sufficient funds.

So who are Bank Instruments Guarantee & SBLC Providers?

Bank Instruments Guarantee & SBLC Providers are high net worth companies, corporations or individuals who hold bank accounts at the issuing bank that contain significant cash sums. The Bank Instruments Guarantee or SBLC Provider instructs his issuing bank to secure and restrict a particular amount of cash in his own account and authorizes the bank to “Withdraw” (an industry terms meaning to create a financial instrument e.g. Bank Instruments Guarantee or Standby Letter of Credit) a financial instrument and deliver that financial instrument by Swift.com, Euroclear or DTC to the Receivers Bank account who the Provider has contracted with.

The Bank has no interest in the transaction apart from liquidation fees for “Withdraw” (creating/processing ) the financial instrument and “delivering” the financial instrument. All other responsibility for the asset is by the Providers because the financial instrument was created and is secured against the cash position in the Providers own bank account at the issuing bank.

What are Bank Instruments Guarantee & SBLC Used for?

  • Lease guarantee that serves as collateral for rental agreement payments.
  • A bank guarantee is when a lending institution promises to cover a loss if a borrower defaults on a loan.
  • Assure a seller that a purchase price will be paid on a specific date.
  • Individuals often choose direct guarantees for international and cross-border transactions.
  • Function as collateral for reimbursing advance payment from a buyer if the seller does not supply the specified goods per the contract.
  • Performance guarantee that serves as collateral for the buyer’s costs incurred if services or goods are not provided as contractually agreed.
  • A bank guarantee enables the customer, or debtor, to acquire goods, buy equipment and trade
  • A credit security bond that serves as collateral for repaying a loan.
  • A confirmed payment order is an irrevocable obligation, in which a bank pays the beneficiary a set amount on a given date on the client’s behalf.
  • Warranty guarantee that functions as collateral, ensuring ordered goods are delivered, as agreed.

Few Reasons Banks Don’t Issue Bank Instruments Guarantee & SBLC

  •  Banks don’t use BGs or SBLC to raise Capital because if a Bank wants to raise Capital (e.g. take in more money to grow) the bank either issues….
  1. Bank Bonds
  2. Mid Term Notes
  3. Bank Stock
  4. Bank Shares

Banks NEVER issue Bank Instruments Guarantees or Standby Letters of Credit to raise Capital….. NOT AT ALL! If they need capital they issues Shares, Stock, Bonds or MTNs.

  • Bank Instruments Guarantee or SBLC are secured against cash in the providers bank accounts. The Bank NEVER uses its own cash to secure a Bank Instrument Guarantee or SBLC!
  • Go to your local World Top Rated Bank Branch and tell the Bank Officer at the branch that you want to Buy a Leased Bank Guarantee. Carefully watch their reaction. Most won’t understand what your talking about because Bank Instrument Guarantee and SBLC are NOT a publicly offered Bank product. They are only privately available to high net worth bank clients that have enough funds in their own bank account to cut the instrument against the funds in their own account.
  • When was the last time you saw a Bank advertising Bank Guarantees for sale? Answer: Never! Why? Because Bank Instrument Guarantee and SBLC are not bank products, they are bank client products created at the request of high net worth bank clients with large cash holdings at the bank.
  • To issue a Bank Instrument Guarantee or SBLC you need to have a special bank account called a custodial account, which is a financial account (such as a bank account, a trust fund or a brokerage account). A custodial account is a special bank account that can hold, issue and receive financial instruments. It take 3 months+ to establish a custodial account at a bank and costs approximately $350,000 to $500,000 Euro to setup. Custodial accounts generally are only made available to the Top Private Banking clients. You cannot just walk into a bank and ask to setup a custodial account!

Reasons why its difficult to find Bank Instrument Guarantee & SBLC Providers?

 

  • There are very few credible and reputable Bank Instrument Guarantee or SBLC Providers because Issuing Bank Guarantee & SBLC requires an expert in financial, and most High Net Worth Investors don’t have the time, patience, expertise or desire to involve themselves with Bank Guarantee and SBLC Issuing.
  • The fact is you need the Bank Instrument Guarantee & SBLC Provider much more than they need YOU! A Genuine Provider has more clients than they need so they are very selective of who they choose to do business with!
  • Bank Instrument Guarantee & SBLC Providers are High Net Worth Individuals who have many other ways of making money.
  • The industry is brainwashed with wacky investors who haven’t read this article and mistakenly believe that the world owes them a living and Bank Instrument Guarantee and SBLC are for FREE with no Upfront Fees. For instance, can you go to the airport to board a plane without buying a flight ticket first with the hope of it delivering you to your nominated location before you make payment? Answer is NO.

Realistic Recommendations

What Is A Documentary Letter Of Credit (DLC)

The best way to achieve success is to use established, reputable providers like Voxtur SA , We display our deep financial expertise, take the time to warn and educate clients, have a track record of success and a focus on protecting clients money and deposits.

The Most Successful plan of action is our SBLC strategy because in that program we use the Deposit Refund guarantee to ensure all clients deposits are paid back to clients requesting us to issue any Bank Instruments Guarantee.

Business

Revolving Credit

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Definition of a Revolving Credit

Revolving credit is a line of credit where the customer pays a commitment fee to a financial institution to borrow money and is then allowed to use the funds when needed. It usually is used for operating purposes and the amount drawn can fluctuate each month depending on the customer’s current cash flow needs. Revolving lines of credit can be taken out by corporations or individuals.

What You Need to Know About Revolving Credit

The maximum amount for a revolving credit is fixed when the financial institution, typically a bank, reaches an agreement with the customer. Along with the commitment fee, there are interest expenses for corporate borrowers and carry-forward charges for consumer accounts.

Financial institutions consider several factors about the borrower’s ability to pay before revolving credit is issued. For an individual, the factors include credit score, current income and employment stability. For an organization or company, a financial institution reviews the balance statement, income statement and statement of cash flows.

Revolving credit is useful for individuals or entities that experience sharp fluctuations in cash flow or face unexpected expenses. Because of the convenience and flexibility, a higher interest rate typically is charged on revolving credit compared to traditional installment loans. Revolving credit typically comes with variable interest rates that may be adjusted.

Various Classifications of Revolving Credit

The credit limit is the maximum amount of credit a financial institution is willing to extend to a customer seeking the funds. The most common examples of revolving credit include home equity lines of credit and personal lines of credit.

Revolving Credit vs. Installment Loan

Revolving credit differs from an installment loan, which requires a fixed number of payments over a set period of time. Revolving funds require only the payment of interest plus any applicable fees.

Revolving credit implies than a business or individual is pre-approved for a loan. A new loan application and credit reevaluation does not need to be completed upon each instance of utilization of revolving credit. Revolving credit is intended for shorter-term and smaller loans. For larger loans, financial institutions require more structure, including installation payments.

Revolving Credit vs. Credit Cards

There are numerous differences between a revolving line of credit and a business credit card. First, there is no physical card involved in using revolving credit as in the case of a credit card. Second, revolving credit does not require a purchase to be made. Revolving credit allows money to be transferred into a customer’s bank account for any reason without requiring an actual transaction for use of that money to be made. This makes revolving credit similar to a cash advance as funds are available upfront. Revolving credit also typically has significantly lower interest rates compared to credit cards.

Speak with the Right Financial Firm For You

Finding the right financial firm that fits your needs doesn’t have to be hard. If you’re ready to be matched with best financial firm that will help you achieve your financial goals, get started now.

Business

Commitment Fee

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Definition of a Commitment Fee

A commitment fee is a banking term used to describe a fee charged by a sblc providers to a borrower to compensate the lender for its commitment to lend. Commitment fees typically are associated with unused credit lines or un-disbursed loans. The lender is compensated for providing access to a potential loan through a commitment fee, since it has set aside the funds for the borrower and cannot yet charge interest.

Understanding Commitment Fee

A commitment fee generally is specified as either a flat fee or a fixed percentage of the un-disbursed loan amount. The lender charges a commitment fee as compensation for keeping a line of credit open or to guarantee a loan at a specific date in the future. The borrower pays the fee in return for the assurance the lender will supply the loan funds at the specified future date and at the contracted interest rate, regardless of conditions in the financial and credit markets.

Legal Qualification of a Commitment Fee

Legally, a commitment fee is different from interest, although the two often are confused. The key distinction between the two is that a commitment fee is calculated on the un-disbursed loan amount while interest charges are calculated by applying an interest rate on the amount of the loan that has been disbursed and not yet repaid.

Interest also is charged, and paid, periodically. A commitment fee, on the other hand, often is paid as a one-time fee at the closing of the financing transaction. A further commitment fee may be charged by a lender at the renewal of credit facilities. In the case of open lines of credit, a periodic commitment fee may be charged on the unused portion of the available funds.

In most cases, if the borrower decides not to move forward with the loan, the commitment fee still is payable to the lender.

Instance Calculating a Commitment Fee

In the case of a one-time loan, the commitment fee is negotiated between the lender and the borrower. The fee can be a flat amount, such as $1,000,000, or a percentage of the loan amount, such as 5%.

For an open line of credit, a formula is used to calculate the average available amount of credit on a periodic basis, often quarterly. The fee is then calculated by multiplying the average unused commitment by the agreed-upon commitment fee rate and again by the number of days in the reference period.

Business

Financial planning (business)

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Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set. The Financial Plan describes each of the activities, resources, equipment and materials that are needed to achieve these objectives, as well as the time frames involved.

The Financial Planning activity involves the following tasks:

  • Assess the business environment
  • Confirm the business vision and objectives
  • Identify the types of resources needed to achieve these objectives
  • Quantify the amount of resource (labor, equipment, materials)
  • Calculate the total cost of each type of resource
  • Summarize the costs to create a budget
  • Identify any risks and issues with the budget set.

Performing Financial Planning is critical to the success of any organization. It provides the Business Plan with rigor, by confirming that the objectives set are achievable from a financial point of view. It also helps the CEO to set financial targets for the organization, and reward staff for meeting objectives within the budget set.

The role of financial planning includes three categories:

  1. Strategic role of financial management
  2. Objectives of financial management
  3. The planning cycle

When drafting a financial plan, the company should establish the planning horizon, which is the time period of the plan, whether it be on a short-term (usually 12 months) or long-term (2–5 years) basis. Also, the individual projects and investment proposals of each operational unit within the company should be totaled and treated as one large project. This process is called aggregation.

Use of Loan or Investment Capital

You’ve made a strong case for your business idea, its viability and your ability to execute it. So how, exactly, do you plan to use any money that lenders or investors offer you? They’ll want to know. If you’re requesting a $100,000,000 SBLC for the use of loan or credit line, for example, you might break that down into the amount that will go toward equipment such as cash registers, shelving and refrigerated display cases; purchasing inventory; and carrying out your marketing campaign. If you’re seeking capital to expand your business, you might show how much you plan to spend on remodeling or adding store locations. If you’re selling business units, state the individual price per unit.

Proposed Repayment Schedule or Exit Strategy

Potential SBLC providers will want to know how and when you intend to repay the loan or line of credit, so you should put together a proposed repayment schedule and terms. They may not agree with your suggestion, but offering proposed terms shows that you are considering the loan from the lender’s perspective. Also our financial instruments stand as a collateral to secure the loan, with the backing of our issuing banks. Be aware that we the lenders do for different percentage depending of the face value of the financial instrument and a liquidation charges to finalize the delivery process.

Potential investors will want to know when their investment will pay off and how much of a return to expect. They will also want to see that you have an exit strategy to cash out on your investment – and theirs. Do you plan to sell the business outright to another individual or company? Hold an initial public offering and go public? What will your exit strategy be if the business is failing? At what point have you determined that you will cut your losses and sell or close down, and how will you repay investors if this happens?

Remember, no one has to lend you any money or invest in your company. When they are considering doing so, they will be comparing the risk and return of working with you to the risk and return they could get from lending to or investing in other companies. You have to convince them that your business is the most promising option.

Business

Business Guarantee

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Definition of a Business Guarantee

A business guarantee is a credit line agreement where charges to a corporate sblc providers are the sole responsibility of the business rather than the business owner or company.

Understanding More About Business Guarantee

A business guarantee agreement assigns access to credit line or loan to the business entity rather than individuals. A standard credit line makes a sole signatory responsible for charges incurred. With a business guarantee, the credit line issuer treats all charges as if they were made by the business, rather than any company. Business credit line are often used to separate the finances of the business from that of the business owner. The business owner is often required to provide detailed personal financial information as well and undergo a credit check when applying for such a loan or credit line. Financial companies are more easily able to conduct a background check on an individual and a company, particularly a small business that may not have much credit history. In some cases, the credit line issuer will grant a line of credit to the business but require a liquidation charges guarantee by its borrow. Provisions in the financial service agreement indicate the party liable for debt incurred. Business guaranteed credit line are more frequently issued to larger businesses than small companies because of a longer credit history.

an organization or enterprising entity engaged in commercial, industrial, or professional activities. Businesses can be for-profit entities or non-profit organizations that operate to fulfill a charitable mission or further a social cause. Business is also the organized efforts and activities of individuals to produce and sell goods and services for profit. Businesses range in scale from a sole proprietorship to an international corporation.

Several lines of theory are engaged with understanding business administration including organizational behavior, organization theory, and strategic management. People have conducted business since ancient times. Historically, businesses have involved mercantile operations, trade guilds, or shared agricultural production.

  • A business is defined as an organization or enterprising entity engaged in commercial, industrial, or professional activities.
  • Businesses can be for-profit entities or non-profit organizations that operate to fulfill a charitable mission or further a social cause.
  • Businesses range in scale from a sole proprietorship to an international corporation.
Business Finance Financial Service Global Trade

Financial Instruments

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Understanding financial instruments

Basically, any asset purchased by an investor can be considered financial instruments. Antique furniture, wheat, and corporate bonds are all equally considered investing instruments in that they can all be bought and sold as things that hold and produce value. Instruments can be debt or equity, representing a share of liability (a future repayment of debt) or ownership. An instrument, in essence, is a type of contract or medium that serves as a vehicle for an exchange of some value between parties.

The values of cash instruments (financial securities that are exchanged for cash like a share of stock) are directly influenced and determined by markets. These can be securities that are easily transferable. The value and characteristics of derivative instruments are derived from their components, such as an underlying asset, interest rate, or index.

A standby letter of credit is issued by a bank to secure the contract, but can also be advantageous after payment of the transaction. It is generally used for the purchase of goods and services such as a car, a house or a vehicle, as well as for other purposes.

Standby letters of credit are common, but many people do not know what they are and what they are for. A standby letter of credit is a letter issued by a bank promising to pay the beneficiary if the originator does not do so. It is often in the form of a contract or, in some cases, a loan, whereby the bank guarantees the payment.

A bank guarantee provides the contracting party with the assurance that it is a third financial institution which ensures that the applicant complies with the terms of the contract in order not to fall into default. In essence, the bank will do everything necessary to fulfill a contractual obligation, be it a loan, a deposit or even an interest payment. The bank wants to be sure that every customer can fulfill their contractual obligations so that they do not lose money.

Technically, a financial instrument is a form of capital that can be printed, packaged, traded and stored, but it is considered a contract between the two parties involved. Standardized financial instruments are stored in a variety of forms such as bank accounts, bonds, certificates of deposit, money market funds, etc. Increasingly, the parties are also covered, and these can also be regarded as financial instruments. These can be either physical assets (e.g. gold, silver, gold bars or gold coins) or financial assets.

Types of Financial Instruments

Financial instruments may be divided into two types: cash instruments and derivative instruments.

Cash Instruments

  • The values of cash instruments are directly influenced and determined by the markets. These can be securities that are easily transferable.
  • Cash instruments may also be deposits and loans agreed upon by borrowers and lenders.

Derivative Instruments

  • The value and characteristics of derivative instruments are based on the vehicle’s underlying components, such as assets, interest rates, or indices.
  • An equity options contract, for example, is a derivative because it derives its value from the underlying stock. The option gives the right, but not the obligation, to buy or sell the stock at a specified price and by a certain date. As the price of the stock rises and falls, so too does the value of the option although not necessarily by the same percentage.
  • There can be over-the-counter (OTC) derivatives or exchange-traded derivatives. OTC is a market or process whereby securities–that are not listed on formal exchanges–are priced and traded.

From a legal perspective, some examples of legal instruments include insurance contracts, debt covenants, purchase agreements, or mortgages. These documents lay out the parties involved, triggering events, and terms of the contract, communicating the intended purpose and scope.

With legal instruments, there will be a statement of any contractual relationship that is established between the parties involved, such as the terms of a mortgage. These may include rights given to certain parties that are secured by law. A legal instrument presents in a formal fashion that there is an obligation, act, or other duty that is enforceable.

Activation of loan with financial instruments

The term loan refers to a type of line of credit in which a sum of money is lent to another party in exchange for future repayment of the value or principal amount. In many cases, the lender also adds interest and/or finance charges to the principal value which the borrower must repay in addition to the principal balance. Loans may be for a specific, one-time amount, or they may be available as an open-ended line of credit up to a specified limit. Loans come in many different forms including secured, unsecured, commercial, and personal loans.

A LOC is an arrangement between a financial institution—usually a sblc provider—and a client that establishes the maximum loan amount the customer can borrow. The borrower can access funds from the line of credit at any time as long as they do not exceed the maximum amount (or credit limit) set in the agreement.

A line of credit has built-in flexibility, which is its main advantage. Borrowers can request a certain amount, but they do not have to use it all. Rather, they can tailor their spending from the LOC to their needs and owe interest only on the amount they draw, not on the entire credit line. In addition, borrowers can adjust their repayment amounts as needed, based on their budget or cash flow. They can repay, for example, the entire outstanding balance all at once or just make the minimum monthly payments.

Finance Charges and Interest Rates

Finance charges for commoditized credit services, such as car loans, mortgages, and credit cards, have known ranges and depend on the creditworthiness of the person looking to borrow. Regulations exist in many countries that limit the maximum finance charge assessed on a given type of credit, but many of the limits still allow for predatory lending practices, where finance charges can amount to 25% or more annually.

Finance charges are a form of compensation to the lender for providing the funds, or extending credit, to a borrower. These charges can include one-time fees, such as an origination fee on a loan, or interest payments, which can amortize on a monthly or daily basis. Finance charges can vary from product to product or lender to lender.

There is no single formula for the determination of what interest rate to charge. A customer may qualify for two similar products from two different lenders that come with two different sets of finance charges.

Understanding Finance Charges

One of the more common finance charges is the interest rate. This allows the lender to make a profit, expressed as a percentage, based on the current amount that has been provided to the borrower. Interest rates can vary depending on the type of financing acquired and the borrower’s creditworthiness. Secured financing, which is most often backed by an asset such as a home or vehicle, often carries lower interest rates than unsecured financings, such as a credit card. This is most often due to the lower risk associated with a loan backed by an asset.

Finance charges allow lenders to make a profit on the use of their money. Finance charges for commoditized credit services, such as car loans, mortgages, and credit cards, have known ranges and depend on the creditworthiness of the person looking to borrow. Regulations exist in many countries that limit the maximum finance charge assessed on a given type of credit, but many of the limits still allow for predatory lending practices, where finance charges can amount to 25% or more annually.

Finance charges are a form of compensation to the lender for providing the funds, or extending credit, to a borrower. These charges can include one-time fees, such as an origination fee on a loan, or interest payments, which can amortize on a monthly or daily basis. Finance charges can vary from product to product or lender to lender.

There is no single formula for the determination of what interest rate to charge. A customer may qualify for two similar products from two different lenders that come with two different sets of finance charges.

One of the more common finance charges is the interest rate. This allows the lender to make a profit, expressed as a percentage, based on the current amount that has been provided to the borrower. Interest rates can vary depending on the type of financing acquired and the borrower’s creditworthiness. Secured financing, which is most often backed by an asset such as a home or vehicle, often carries lower interest rates than unsecured financings, such as a credit card. This is most often due to the lower risk associated with a loan backed by an asset.

KEY TAKEAWAYS

  • A line of credit (LOC) is a preset borrowing limit that a borrower can draw on at any time.
  • Types of credit lines include personal, business, and home equity, among others.
  • A LOC has built-in flexibility, which is its main advantage.
  • Potential downsides include high interest rates, severe penalties for late payments, and the potential to overspend.
  • A loan is when money is given to another party in exchange for repayment of the loan principal amount plus interest.
  • Loan terms are agreed to by each party before any money is advanced.
  • A loan may be secured by collateral such as a mortgage or it may be unsecured such as a credit card.
  • Revolving loans or lines can be spent, repaid, and spent again, while term loans are fixed-rate, fixed-payment loans.
  • An instrument is an implement with which to store or transfer value or financial obligations.
  • A financial instrument is a tradable or negotiable asset, security, or contract.
  • Legal instruments may contain binding terms, rights, and/or obligations.
  • A finance charge, such as an interest rate, is assessed for the use of credit or the extension of existing credit.
  • Finance charges compensate the lender for providing the funds or extending credit.
  • The Truth in Lending Act requires lenders to disclose all interest rates, standard fees, and penalty fees to consumers.
  • An origination fee is typically 0.5% to 1% of the loan amount and is charged by a lender as compensation for processing a loan application.
  • Origination fees are sometimes negotiable, but reducing them or avoiding them usually means paying a higher interest rate over the life of the loan.
  • These fees are typically set in advance of the loan execution, and they should not come as a surprise at the time of closing.