This is a question about acquiring a credit enhancement in addition to already having a large bank revolving line of credit. Or, perhaps taking another route -

Let's say a Company has a revolving line of credit of $20M with a particular bank, Bank A. The same company uses that revolving line to pay a 3rd party bank, Bank B. Bank B has very strict guidelines in establishing a line of credit with them, but Company needs at least a $10M line with Bank B to float until payment is due.

Assume very high $ volume, but very low margin and extremely low risk (all accounts are insured).

• Would you be looking to individuals or investment companies to vouch for the $10M as a credit enhancement - similar to a Letter of Credit?
• Are there any other avenues you might consider?
• What would be a good rate for a credit enhancement, considering the Company is not looking to use $10M as a loan, but more as a Letter of Credit type situation where the backer maintains their funds in a high yield savings type place?

WAG on pricing, but probably 150-200 bps spread over the treasury corresponding to the amount of time the collateral would be tied up. Given yield curve inversion, and what short term rates are, there may not be much of an appetite to lock up that cash with the additional risk compared to the short term risk-free rate. So effectively your spread may need to be higher than that depending on your borrowing horizon.