Standby Letter of Credit

Selecting the right Standby Letter of Credit (SBLC) provider is crucial for safeguarding your business's financial interests. This decision should be based on your specific business requirements, the nature of your transactions, and your financial strength.


If your company has a high revenue turnover and a strong credit history with your bank, obtaining an SBLC from a local bank can be particularly advantageous.


Local banks that are familiar with your financial standing may offer more favorable terms, lower fees, and expedited processing times. They can also provide personalized service and a deeper understanding of your business needs, which can enhance the efficiency and effectiveness of the SBLC issuance.


We can also assist by issuing SBLCs on your behalf, offering flexible solutions tailored to your financial objectives.

Standby Letter of Credit  | Corporate Clients

Objective — secure a bank-issued Standby Letter of Credit (SLOC) that satisfies the counter-party while keeping your working capital intact. Where collateral capacity is tight, Financely arranges:

  • Asset-based loans against receivables, inventory, or hard assets
  • Equity injections from professional investors
  • Sponsor issuance, subject to due diligence and KYC

All SLOCs are issued by recognised banks and can be confirmed if required. Final selection of the issuing institution depends on jurisdiction, sector, and credit appetite; it is determined during negotiations, not at enquiry stage.

First step: complete the screening form below. The form is an information intake only; no fees are payable until both parties execute a mandate letter.

Bank-Preferred Ticket Size

USD 5 million – 100 million per SLOC provides optimum pricing and credit bandwidth.

Regulatory Framework

SLOCs are typically issued subject to ISP 98 (ICC Pub. 590) or, where required, UCP 600 (ICC Pub. 600). Choice of rules is agreed case-by-case.

End-to-End Governance

FINRA-licensed chaperone available for any securities transfers; full AML/KYC alignment with Wolfsberg-ICC-BAFT trade-finance principles.

Indicative Economics

Retainer USD 50 000 – 200 000
Payable post-mandate; funds third-party legal opinions, collateral valuations, and credit processing.
Success Fee 1 – 3 % of face amount
Delivery SWIFT MT760 or Bank Guarantee
Process Overview  (Typical 4 – 12 weeks)
1. Screening form (Day 0)
2. Indicative response (24 h)
3. Mandate, KYC, retainer (Week 1 – 2)
4. Collateral arrangement or sponsor onboarding (Week 2 – 6)
5. Issuing-bank credit committee, draft wording (Week 6 – 10)
6. Final issuance, SWIFT MT760 live (Week 10 – 12)
Submit Transaction Details
Preliminary feedback within one business day

Information Required

• Beneficiary legal name, address, contact
• Contract value, currency, governing law
• Requested SLOC amount & expiry (max. 12 months)
• Collateral available and preferred structure
• Underlying transaction summary and delivery milestones
• Target draw-down date

Attach draft contracts, purchase orders, or term sheets. Detailed data accelerates credit approval.

Frequently Asked Questions

What rule set governs the SLOC?

SLOCs are usually issued under ISP 98 (ICC Publication 590). In some jurisdictions, parties elect UCP 600. Rule selection is indicated in the credit text and binds all parties.

Which transactions are bankable?

Likely to qualify: turnkey EPC contracts, project-linked performance obligations, commodity trade with confirmed off-take, secured import finance, and performance bonds where call risk is demonstrably low.

Unlikely to qualify: speculative commodity positions, cryptocurrency-related trades, business involving sanctioned parties, and projects with unresolved environmental or licensing issues.

Why is minimal call risk important?

Issuing banks treat a standby LC as a secondary obligation. High expected call frequency increases capital allocation and can render a deal uneconomical.

Can we choose the issuing bank?

Preference can be indicated, but final selection depends on ticket size, jurisdiction, counter-party, and available credit lines. All issuers are regulated and clear through established correspondent networks.

Are retainer funds refundable if issuance fails?

No. The retainer covers third-party legal, valuations, and due-diligence expenses already incurred. Engagement proceeds only after both parties accept this cost allocation.

What happens if the contract value changes?

Amendments to an issued SLOC require consent from the issuing bank, any confirming bank, and the beneficiary, in line with UCP 600 Article 10. Additional underwriting and fees may apply.

How is compliance monitored?

Financely follows the Wolfsberg-ICC-BAFT Trade-Finance Principles and runs sanctions, AML, and adverse-media screening on all parties.

Disclaimer. Financely acts solely as arranger and is not a lender or issuing bank. All mandates are subject to KYC, AML, and credit approval by the proposed issuing institution. Timeframes and fees are indicative; they may adjust if transaction parameters change. This material does not constitute an offer to provide banking or securities services in any jurisdiction where such offer would be unlawful.

Secured VS Unsecured SBLC

Collateralized SBLC

When dealing with most banks, they will ask you to have 100% collateral to back up the Letter of Credit. This means you need to secure the credit with assets or cash equivalent to the value of the credit.


Be mindful that banks will also charge extra fees for using the Letter of Credit, usually between 2% & 6% annually, plus some initial issuing charges.


Knowing these costs is important to use SBLC effectively for your business needs. 

Unsecured SBLC

In some rare situations, if you don’t have enough collateral, a bank might still issue an unsecured LC if they think the transaction is low risk.


In case the bank insists on collateral and you don’t have it, you will need to find a third party to provide it.


It’s crucial to understand these aspects to avoid any unforeseen complications in your business transactions. 

 

Schedule Your Consultation to Secure an SBLC

During your consultation, we'll discuss your requirements for a Standby Letter of Credit, evaluate eligibility, and outline next steps. We'll also address any questions you may have.

After the consultation, you'll receive a detailed proposal tailored to your needs.

Please note*: a fee applies for the one-hour consultation.

Unanswered Questions? We’re here to help!

We want to know your needs exactly so that we can provide the perfect solution. Let us know what you want and we’ll do our best to help. 

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