Bank Instruments Explained: POF, SBLC, DLC, UPAS, Performance Bonds & Advance Payment Guarantees

Searching for reliable bank instruments to secure large trades, construction projects or real‑estate deals? You’re in the right place. In this guide we decode the most requested trade‑finance tools— Proof of Funds (POF), Standby Letter of Credit (SBLC), Documentary Letter of Credit (DLC), UPAS LC, Performance Bond and Advance Payment Guarantee —and outline how Financely Group arranges each instrument quickly and compliantly.

1. Proof of Funds (POF)

A Proof of Funds letter is a bank statement or SWIFT message confirming that a buyer has sufficient cash on hand for a transaction. For cross‑border trades it’s normally delivered as an MT199 or MT799 “Ready, Willing & Able” (RWA) letter.

• Why it matters: Sellers avoid wasting time on under‑funded buyers.
• When to use: Early‑stage commodity deals, real‑estate contract exchanges, PPA negotiations.
• Typical timeline: 3‑5 working days once KYC and escrow are in place.

2. Standby Letter of Credit (SBLC)

An SBLC is an irrevocable bank guarantee—callable if the applicant defaults. Issued via SWIFT MT760 and governed by UCP 600 or ISP 98.

• Use cases: Performance guarantees, payment assurance under PPAs, bridge financing for M&A, real‑estate earnest money deposits.
• Face value: USD 2 m – 100 m (higher on syndication).
• Tenor: 90 – 365 days, extendable.

3. Documentary Letter of Credit (DLC)

A DLC is a traditional trade LC paying on presentation of conforming documents. Transmitted as MT700/710.

• Why traders love it: Converts counterparty risk to bank risk.
• Common in: Bulk commodity trades, capital‑goods exports, structured trade cycles.
• Repayment: Buyer pays bank after documents clear; sellers receive sight or usance proceeds.

4. UPAS LC (Usance Payable at Sight)

UPAS LCs combine seller‑friendly sight payment with buyer‑friendly usance terms. The confirming bank discounts the drafts at sight; the buyer repays at maturity (30‑180 days).

• Advantage: Buyer preserves working capital; seller gets cash immediately.
• Perfect for: Commodity trades with tight margins, importers needing longer credit terms.

5. Performance Bond

A Performance Bond(or performance guarantee) obliges a bank to pay the project owner if the contractor fails to perform per contract. Common formats: MT760 or local bank guarantee wording.

• Sectors: EPC, real estate development, infrastructure, mining, oil & gas.
• Typical value: 5%‑15% of contract value.
• Tenor: Until completion or handover milestone.

6. Advance Payment Guarantee (APG)

An Advance Payment Guarantee protects the buyer’s upfront payment. If the supplier does not deliver, the bank refunds the advance.

• Value: Matches advance—usually 10%‑30% of contract.
• Industries: Construction, large equipment orders, bespoke manufacturing.
• Expiry: Reduces pro‑rata or releases on receipt of goods/services.

7. How Financely Arranges These Bank Instruments

1. Mandate & Retainer: We sign an engagement letter, lock scope, and collect a retainer (USD 5k – 100k, depending on instrument size).
2. Data Room Build: Upload contracts, invoices, collateral, KYC. Our analysts scrub and package them for bank review.
3. Bank Line‑Up: We match your transaction with Tier‑1 or Tier‑2 banks willing to issue or confirm the instrument.
4. Term Sheet Negotiation: Fees, margin, collateral, wording, and expiry are aligned with all parties.
5. Issuance: Bank transmits MT700/710/760/799 or local guarantee. We monitor SWIFT and resolve discrepancies.
6. Post‑Issuance Support: Amendments, extensions, and drawdown monitoring until the instrument expires clean.

8. Why Clients Choose Financely

• Real bank relationships: No “leased” or offshore shell guarantees.
• Fast turnaround: Instruments issued in 3‑21 working days once docs are complete.
• Transparent pricing: Arrangement + issuance fees disclosed upfront—no hidden mark‑ups.
• Cross‑sector expertise: Commodity trade, CRE, renewables, infrastructure, manufacturing.
• Global coverage: Applicants in OECD and select emerging markets; beneficiaries worldwide.

9. Frequently Asked Questions

Can you issue instruments without cash collateral?

Partial collateral structures (30%‑50%) are feasible when backed by insured receivables, warehoused goods, or strong corporate guarantees.

What’s the smallest deal size you handle?

USD 1 million face value for DLCs and APGs; USD 2 million for SBLCs and Performance Bonds.

Do you confirm LCs and guarantees?

Yes. We can add confirmation via an investment‑grade bank to remove country or issuing‑bank risk.

How long does it take?

POF letters in 3‑5 days; SBLCs, DLCs, UPAS LCs, Performance Bonds and APGs in 7‑21 working days, assuming complete documentation.

Will my supplier accept your bank?

We only work with globally recognised banks (e.g., JPMorgan, Standard Chartered, CCB, BNP Paribas, HSBC) or strong regional names pre‑agreed with counterparties.

Financely Group arranges bank instruments via regulated financial institutions. We do not take deposits or issue guarantees ourselves. All mandates require KYC, compliance checks, and non‑refundable retainers. Issuance is subject to final bank approval and collateral conditions. Misrepresentation terminates engagements and may trigger mandatory reporting.