Turn Your LC or SBLC Into Cash: Standby and Documentary Letter of Credit Monetization

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Standby and Documentary Letter of Credit Monetization

Standby and documentary letter of credit monetization turns a bank undertaking into cash: an exporter discounts an accepted documentary LC, or a borrower raises a loan secured by an SBLC issued in favour of the lender.

Financely structures both routes and places them with banks, forfaiters and private credit lenders. We are an advisor and arranger, not a lender or monetizer.

Stacked hundred dollar bills

How monetization works

Client Bank Funder Cash

Documentary LC discounting

  1. 1

    LC received

    Exporter receives a documentary LC from the buyer's bank, ideally confirmed.

  2. 2

    Goods shipped

    Exporter ships and presents complying documents under UCP 600.

  3. 3

    Bank accepts

    The issuing or confirming bank accepts the documents and the deferred payment or draft.

  4. 4

    LC discounted

    A bank or forfaiter buys the accepted proceeds at a discount, often without recourse.

  5. 5

    Exporter paid

    Cash arrives now. The discounter collects from the bank at maturity.

SBLC-backed lending

  1. 1

    Loan structured

    Borrower agrees a facility with a lender, with the SBLC as credit support.

  2. 2

    SBLC issued

    The borrower's bank issues the SBLC in favour of the lender under ISP98 or URDG 758.

  3. 3

    Lender verifies

    The lender authenticates the SWIFT message and assesses the issuing bank's rating.

  4. 4

    Loan advanced

    The lender advances a percentage of SBLC face value to the borrower.

  5. 5

    Repay or draw

    The borrower repays from the funded project or trade. On default, the lender draws the SBLC.

What you get

Who it is for

Exporters holding LCs who want cash before maturity, and companies whose bank will issue an SBLC to support a loan for trade, equipment or projects. If you still need the instrument itself, see our documentary letter of credit services and SBLC services.

Have an LC or SBLC to monetize?

Send the draft or issued instrument, the issuing bank, amount, tenor and use of funds. We will tell you which funders fit and on what terms.

Frequently asked questions

What does LC monetization mean?

It means turning a letter of credit into cash before it pays out, either by discounting an accepted documentary LC or by borrowing against an SBLC issued in favour of a lender.

Can any SBLC be monetized?

No. The lender must accept the issuing bank's credit, the SBLC must name the lender as beneficiary or be assignable to it, and the borrower must show a use of funds and a repayment source.

How much can I receive?

It depends on the issuing bank's rating, the tenor, the country and the borrower. Accepted DLCs from strong banks discount close to face value less interest. SBLC-backed loans advance a share of face value.

Is Financely a lender or monetizer?

No. Financely is an advisor and arranger. We structure the transaction and place it with banks, forfaiters and private credit lenders, who make their own credit decisions.

This page is for general information only and does not constitute legal, tax or investment advice. Financely is an advisory and arranging firm, not a bank, lender or broker-dealer. Any discounting or SBLC-backed facility is subject to the funder's KYC, credit approval, verification of the instrument and documentation, and no advance rate, price or timeline is guaranteed.

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