Fresh Cut SBLC
Fresh Cut SBLCs Don’t Exist. They’re a Unicorn.
The “Fresh Cut” Pitch vs. How Banks Actually Work
| Myth | Fact |
|---|---|
| “We can get a fresh cut SBLC from a Tier-1 bank with no upfront fees.” | Banks charge issuance and legal fees. Collateral and messaging costs exist. Private debt providers also charge coupons and closing fees when they fund collateral shortfalls. |
| “Just send MT799, then MT760. We’ll pay at closing.” | Authenticated SWIFT messages follow approvals and paid work. Free messaging is not real. Issuance via MT760 comes after compliance and fee letters. |
| “Issuer brand is all that matters.” | Applicant credit, collateral, tenor, country risk, and draw mechanics drive decisions. Brand does not replace underwriting. |
| “Leased instruments are acceptable.” | Regulated banks and insurers reject leased standbys and similar schemes. Known red flag. |
Rule Sets And Messaging
- ISP98 — on-demand standby practice used for most SBLCs.
- UCP 600 — documentary credit rules when presentation involves documents beyond a simple demand.
- URDG 758 — demand guarantees when a guarantee is the correct instrument.
SWIFT: MT760 issuance, MT767 amendments, MT799 pre-advice/free-format. Advising and authentication are bank-to-bank.
Collateral Is Non-Negotiable
Acceptable Security
- Cash or T-bills in a controlled account
- Receivables assignment with account control
- Inventory under third-party collateral management
- Marketable securities or hard assets with first-lien pledge
- Parent or sponsor guarantee with tested capacity
When You Don’t Have It
We arrange a collateral backstop in the private debt market sized to your shortfall. That facility has its own term sheet, pricing, legal documents, trustee/security agent, and closing fees. Sometimes a rating is required if institutional investors are involved.
What Financely Executes As Arranger
Track A — Collateral Raise
- Size shortfall and structure pledged-cash or asset-backed line
- Trustee or security agent, escrow/account control
- Pricing: coupon plus OID or closing fee
Track B — Issuance & Confirmation
- Draft wording under ISP98/UCP 600/URDG 758
- Issuing bank approvals; add confirmation if beneficiary requires a second undertaking
- Fee letters, SWIFT setup, monitoring through expiry
Pricing — Collateral Raise, Issuance, Confirmation
| Workstream | Fee Basis | When Charged | Notes |
|---|---|---|---|
| Arranger retainer (Financely) | USD 75,000 to 250,000 | At mandate | Structuring, bank route, wording, diligence coordination |
| Arranger success fee | 0.75% to 2.00% of face | On issuance and/or confirmation | Trigger defined in mandate |
| Collateral facility (private debt) | Coupon 10%–16% p.a. + 1%–3% OID/closing | At collateral close | Pledged cash/assets into controlled account |
| Issuance fee (issuing bank) | 0.50%–2.00% p.a. pro-rated | On issuance | Applicant, tenor, and country driven |
| Confirmation fee (confirming bank) | 0.50%–3.00% p.a. | On confirmation | Issuer and country risk driven |
| Legal, trustee/security agent, escrow | Itemized schedules | At signing and as incurred | Security docs, account control, opinions |
| SWIFT, advising, amendments | Bank tariff per event | As incurred | MT760 issuance, MT767 amendments |
| Rating (if required) | USD 40,000–250,000+ | As incurred | For note programs/insurance investors |
Closing Procedure And Timeline
| Day | Milestone | What Happens |
|---|---|---|
| Day 1 | Mandate & intake | Sign mandate; submit KYC, financials, purpose, draft wording, beneficiary details |
| Day 3–7 | Collateral term sheet | Private debt soft-clear; pledge or cash collateral path with trustee/security agent |
| Day 8–14 | Wording & bank route | Finalize ISP98/UCP 600/URDG 758 terms; identify issuing and confirming banks; price bands agreed subject to approvals |
| Day 15–28 | Approvals & documents | Collateral docs and opinions; account control; issuer credit approval; fee letters; SWIFT setup |
| Day 29–35 | Fund collateral | Private debt funds backstop; pledge/escrow in place |
| Day 36–45 | Issuance & confirmation | MT760 sent; advising bank authenticates; confirmer books undertaking if required |
| Day 46+ | Monitoring | Amendments via MT767 if needed; monitor until expiry/cancellation; collateral line reduces as obligations fall away |
SBLC Pricing Simulator (Indicative)
Answer a few questions to see a ballpark of upfront costs and annual charges. This is a guide, not an offer.
Assumptions: retainer per schedule; legal/trustee placeholder USD 85,000; SWIFT/advising USD 7,500; collateral OID/closing 2%; private-debt coupon varies by risk and collateral type. Fees scale with face value and risk.
Request The Contract
We will return scope, fee terms, and the issuing route aligned to your case.
Request the ContractFinancely acts as arranger and advisor. We are not a bank. All engagements require KYC/AML and sanctions screening. Banks and private credit funds make independent approvals and set final pricing. Ranges above are indicative and depend on applicant strength, tenor, amount, jurisdiction, and instrument terms. Nothing here is a commitment to lend or a binding quote. Any securities activity is conducted through a licensed chaperone, Member FINRA/SIPC.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
All submissions are
promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.
Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
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Submit a RequestOnce we receive your submission, our team will review your information to determine feasibility. If eligible, you will receive a proposal or term sheet within 1–3 business days. Visit our FAQ and Procedure pages for more information.
Disclaimer: Financely provides financing based on due diligence and feasibility. Approval is not guaranteed, and past performance does not predict future outcomes. All terms are subject to review. Financely primarily assists with structuring and distribution. Qualified parties carry out the project if the client approves the proposal.
