Letters of Credit (LC) vs SBLC vs UPAS: What to Request and When
Letters of Credit (LC) vs SBLC vs UPAS — What to Request and When
Most requests land as “I need an LC.” That’s vague. The wrong instrument adds weeks, burns fees, and can still fail compliance. Use the quick matrix below to pick the tool that actually gets the cargo released and the supplier paid on time.
Instrument Chooser (Use-Case Matrix)
| Goal | Pick | What it achieves | When funds move |
|---|---|---|---|
| Control shipment with documents (B/L, invoice, packing list) | Commercial LC | Bank pays against compliant documents; seller relies on LC terms, not buyer promises | At sight or at usance per LC terms |
| Give a payment/performance guarantee without a full LC | SBLC(Standby LC) | Bank undertakes to pay if buyer fails to pay/perform; often used for deposits, rentals, or contract security | On demand upon presentation under SBLC wording |
| Supplier wants cash at sight; buyer needs tenor financing | UPAS LC(Usance Payable At Sight) | Exporter gets paid at sight; importer repays bank at a later date (30–180 days typical) | Exporter: sight; Importer: at usance maturity |
LC vs SBLC vs UPAS — Side-by-Side
| Feature | Commercial LC | SBLC | UPAS LC |
|---|---|---|---|
| Primary purpose | Documentary payment for goods | Payment/performance backstop | Sight payment to seller + tenor to buyer |
| Who it reassures | Exporter (gets paid vs docs) | Exporter/landlord/counterparty (if buyer defaults) | Exporter (sight cash), Importer (credit) |
| Typical add-ons | Confirmation by a top-tier bank; discounting | On-demand wording; expiry and claim window clarity | Confirmation + usance financing mechanics |
| Tenor | Sight or usance (30–180 days common) | Expiry + claim terms; not a payment schedule | Seller paid at sight; buyer repays at 30–180 days |
| Issuance speed* | ~3–10 business days post-KYC and terms | ~3–10 business days post-KYC and wording sign-off | ~5–12 business days (adds usance/confirmation steps) |
| Cost drivers | Issuance %, confirmation %, advising, SWIFT, courier | Issuance %, wording, advising, SWIFT | Issuance %, confirmation %, usance interest, fees |
*Ranges reflect clean files. Add time for complex KYC, sanctions, or extra confirmations.
Fee & Timeline Bands (Indicative)
| Item | Commercial LC | SBLC | UPAS LC |
|---|---|---|---|
| Issuance fee (per annum, pro-rated) | ~0.75%–2.00% | ~1.00%–2.50% | ~0.90%–2.00% |
| Confirmation (if added) | ~0.50%–3.00% p.a. (market/country risk) | ~0.75%–3.50% p.a. | ~0.75%–3.00% p.a. |
| Usance interest (buyer tenor) | N/A or per discounting terms | N/A | Benchmark + spread for 30–180 days |
| Advising / SWIFT / courier | Fixed bank charges per bank | Fixed bank charges per bank | Fixed bank charges + usance mechanics |
| Typical issuance time (clean file) | 3–10 business days | 3–10 business days | 5–12 business days |
Documents That Pass First Time
- Contract & Proforma: product specs, Incoterms, price, shipment window, partials/transshipment rules.
- KYC pack: company docs, owners, addresses, website, trade track record.
- Shipping set: commercial invoice, packing list, clean on-board B/L or AWB, certificate of origin, inspection where required.
- Insurance: per Incoterms; if CIF/CIP, present the policy/certificate to LC terms.
- Compliance: sanctions and AML screenings, restricted party checks, vessel/port clearance where sensitive.
What Usually Derails a Trade
- LC wording doesn’t match the sales contract or Incoterms.
- Bank tries to issue without clean KYC or clear source of goods — instant delay.
- Documents don’t match LC fields (names, weights, dates, ports).
- Ignoring confirmation when the seller’s bank will not risk the issuing bank/country.
- Missing rate/charges agreement for UPAS usance interest.
How We Help Close
We scope the trade, pick the right instrument, and place it with banks that will actually sign. That includes drafting workable wording, lining up confirmation when needed, and walking the document set so your shipment isn’t stuck over avoidable discrepancies. Start to finish, we keep you out of dead ends and into a bankable path.
Need the right LC or SBLC now?
Share your contract terms, shipment window, and target amount. We’ll map the instrument and get you a path that can clear credit and compliance.
Price My LC / SBLC / UPASFAQ
Do I always need confirmation
No. Add it when the exporter won’t accept the issuing bank/country risk or when contractually required.
How big can these transactions be
We work across small tickets to eight- and nine-figure trades. The bank set changes with size and risk.
Can an SBLC replace a Commercial LC
Different purpose. An SBLC is a backstop. A Commercial LC is a document-against-payment engine. Use the right tool for the promise you’re making.
What’s special about UPAS LC
Seller gets sight cash. Buyer repays later. Good when supplier wants immediate payment but the buyer needs short tenor to sell or process the goods.
What slows issuance the most
Messy KYC, vague wording, and missing contract terms. Clean files move fastest.
This page is informational. Any placement depends on bank credit approval, KYC/AML, sanctions checks, and finalized wording consistent with the sales contract and applicable rules.
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.
Trade Finance
Tap into solutions like letters of credit, bank guarantees, and payment facilitation. We address the challenge of global transaction risk through structured strategies that foster cross-border growth. Complete the form to unlock streamlined funding aligned with your commercial objectives.
Submit a RequestProject Finance
Access non-recourse funding for infrastructure, renewable energy, or other capital-intensive ventures. We mitigate capital constraints by isolating project assets and focusing on risk management. Provide your details to receive a structure that drives growth and maximizes returns.
Submit a RequestAcquisitions
Secure financing for business or real estate acquisitions. We ease transaction hurdles by reviewing cash flow, synergy opportunities, and exit plans. Complete the form for a customized proposal that supports your strategic investment objectives.
Submit a RequestFor Banks
Financely assists banks facing Basel III pressures by distributing trade finance deals and providing collateral for letters of credit. We reduce capital burdens while preserving client relationships and fostering service expansion. Submit your request to optimize your trade finance offerings.
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.
