Raising Bank and Private Facilities: Revolving Credits, SBLCs, UPAS and DLCs in 2025

1 Overview

Corporates with cross-border supply chains or lumpy cash-flow cycles rely on short-term bank paper to keep inventory moving and payables current. Four instruments dominate board agendas in 2025: revolving credit facilities (RCF), standby letters of credit (SBLC), usance payable-at-sight (UPAS) letters and classic documentary letters of credit (DLC). Each product serves a distinct cash or risk-mitigation need, yet all funnel through the same credit-committee lens—covenants, collateral, pricing grid and sanctions compliance. The following guide sets out eligibility, economics and process so treasury teams can land commitments before the next rate shift.

2 Product Snapshot

Instrument	Primary Use-Case	Typical Tenor	Advance / Face Value	Fee or Margin Range
Revolving Credit Facility	General working capital	364-day, 3-year or 5-year	Up to 45 % of annual sales or 65 % of borrower-adjusted borrowing base	SOFR + 110–225 bp; undrawn 25–45 bp
SBLC (Bank Guarantee)	Bid, performance or payment security	30–730 days	100 % of required guarantee amount	Issuance 100–300 bp flat or 75–150 bp per annum
UPAS LC	Supplier paid at sight—importer repays on usance	90–360 days	Up to 100 % of invoice	Issuance 75–150 bp flat; discount margin SOFR + 175–275 bp
DLC (Sight / Usance)	Traditional trade settlement	Sight to 180 days	100 % of invoice	Issuance 60–120 bp flat; confirmation 50–200 bp

3 Credit Appetite in 2025

Money-center banks still anchor revolving lines for investment-grade names, quoting margins as low as SOFR plus 85 basis points when leverage stays inside two times EBITDA. Middle-market borrowers face a wider spread—often SOFR plus 200 basis points—reflecting tighter wholesale funding costs and elevated loss provisioning. SBLC and LC desks remain selective on frontier jurisdictions, adding country-risk add-ons up to 250 basis points or demanding cash margins. Private credit funds have stepped in with bilateral RCFs that carry no syndication risk but clear closer to SOFR plus 350 basis points. Sponsors choose certainty of execution over headline price when refinancing cliffs approach.

4 Eligibility and Covenants

Lenders focus on three metrics: net leverage, fixed-charge cover and liquidity headroom post-draw. Term sheets often require:

• Net-Leverage Cap: 4.0× for unsecured lines and 5.5× for secured borrowing-base structures.
• Minimum Fixed-Charge Cover: 1.25× measured quarterly.
• Springing Cash Sweep: one-third of free cash flow when leverage breaches soft triggers.
• Sanctions Undertaking: clean supply chain free of restricted counterparties; documentary LCs face full dual-use screening.

5 Process Timeline

Lead time depends on documentation complexity. A vanilla RCF amendment for an existing borrower can close in two weeks. A first-time UPAS programme with a frontier counter-buyer may stretch to eight weeks due to correspondent approvals. A typical sequence follows:

1. Week 1: Borrower issues request for proposal, shares audited financials and trade-flow data.
2. Week 2–3: Banks produce indication letters. Borrower shortlists two leads, grants data-room access and answers due-diligence queries.
3. Week 4: Term sheet execution, fee letter countersigned, legal counsel instructed.
4. Week 5–6: Documentation—credit agreement, LC reimbursement agreement, borrowing-base certificate template—circulates. KYC refresh completes.
5. Week 7: Collateral filings (UCC-1 or local equivalent) and, if secured, depositary control agreements finalised.
6. Week 8: Conditions precedent ticked, legal opinions delivered, facility goes live. SBLC or LC lines start issuance on day one; RCF draws usually follow settlement of first borrowing-base certificate.

6 Cost Components

Beyond margin or issuance fee, borrowers should budget:

• Commitment Fee: 0.25–0.45 % on undrawn RCF balances.
• Participation Fee: 50–75 % of the drawn margin for multicurrency swinglines.
• LC Fronting Fee: 10–25 bp per annum paid to issuing bank outside the syndicate margin.
• Legal and Agency: USD 75,000-150,000 on simple renewals; significantly higher when multi-jurisdiction collateral is involved.

7 Common Risk and Fraud Themes

Discrepant documents remain the leading trigger for refusal of payment under DLCs. Mis-description of goods or late presentation can void the bank’s obligation. Electronic presentation platforms reduce manual typing errors, yet borrowers still face sanctions traps when counterparties re-export controlled goods. SBLC scams include fake swift messages issued from spoofed BIC codes. Verification through authenticated SWIFT FIN confirmations and callback protocols is now standard. For UPAS, the risk sits in the secondary purchase of the usance receivable. Borrowers mitigate by insisting on irrevocable reimbursement undertakings from top-tier confirming banks.

8 Arranger Role and Economics

Financely shapes the facility grid, syndicates commitments and shoulders document negotiations. A flat mandate fee of USD 100,000-300,000 secures engagement. Success fees run two to four percent of incremental liquidity raised, staggered across tranches—RCF, LC sub-limit and ancillary swingline—to align interests. Our trade-finance desk scrubs counterparty sanctions data, structures borrowing-base tests and manages agency onboarding so treasury teams hit quarter-end funding targets without hiccups.

9 Closing Checklist

Item	Responsible Party	Status Gate
Final Credit Agreement	Lead Arranger Counsel	Signed by all parties
Board Resolutions	Borrower	Certified copies delivered
Officer’s Certificate	Borrower CFO	Conditions precedent confirmed
KYC & Beneficial Ownership	All Lenders	Approval e-mails filed
Collateral Filings	Security Agent	UCC-1 stamped
Legal Opinions	Borrower Counsel	Distributed to syndicate
Fee Payments	Borrower Treasury	Same-day wires sent

Numbers reflect prevailing North-American and European market levels as of Q2 2025 and are subject to revision. Financely Group acts as arranger only and does not extend credit on its balance sheet. This document is for information purposes and is not a commitment to lend or arrange.