Standby Letter of Credit for Real Estate
Large real estate deals often need more than equity and debt. Developers and investors face requirements for credit enhancement, lease guarantees, or proof of funds. A Standby Letter of Credit (SBLC)
fills this gap. We arrange SBLC facilities for acquisitions, ground-up developments, and leasing commitments. Minimum transaction size $10M.
Bottom line:
SBLCs provide certainty to sellers, landlords, and lenders. They help real estate sponsors secure deals and unlock leverage without tying up cash.
1. How SBLCs Work in Real Estate
An SBLC is a bank-issued guarantee that supports a real estate obligation. It acts as a backstop if the applicant defaults. In real estate, SBLCs are widely used to demonstrate financial strength, secure transactions, and meet counterpart requirements without deploying capital upfront.
- Acquisitions:
Used as proof of funds or earnest money in large property purchases.
- Development:
Backing performance obligations to contractors, municipalities, or lenders.
- Leasing:
Replacing traditional cash security deposits with SBLCs for commercial leases.
- Financing:
Enhancing credit profile to access bridge loans, construction finance, or mezzanine debt.
2. Instruments We Arrange
- Acquisition SBLCs:
To support purchase and sale agreements or bid requirements.
- Development SBLCs:
Guaranteeing performance milestones or permitting obligations.
- Lease SBLCs:
Commercial lease guarantees in place of cash deposits.
- Construction & Bridge Facilities:
SBLC-backed lines to unlock working capital.
- Credit-Enhanced Financing:
Structuring debt where SBLCs reduce lender risk.
3. What Counterparties Expect To See
- Bank-issued SBLC under ICC rules (ISP98 or UCP600).
- Facility size adequate for the real estate obligation.
- Clear terms on drawdown, validity, and renewal.
- Legal entity structure, source of funds, and compliance documents.
- Underlying real estate contract, lease, or financing agreement.
4. How Financely Helps
We underwrite the transaction, structure the facility, and arrange issuance with banks and credit providers. Our role is to align the SBLC with your deal terms, so counterparties accept it without friction.
- Assessment of acquisition, development, or lease requirements.
- Design of SBLC facility
tailored to your transaction.
- Negotiation of issuance terms with banks and counterparties.
- Integration of SBLC into the capital stack to support financing.
- Investor and lender presentations, data room, and compliance coordination.
5. Process & Timeline
- Week 1:
Mandate, transaction review, and document checklist.
- Week 2–3:
Underwriting, bank engagement, draft issuance terms.
- Week 4–6:
Final SBLC terms, compliance approvals, issuance.
- Routine transactions:
30–60 days from mandate to issuance, subject to counterparty acceptance.
Fees
Upfront premium: 3–7%
of facility size, depending on risk. Annual renewal fee: 2–3%. Best-efforts. Subject to underwriting, compliance, and bank approval.
Ready To Secure Your Real Estate Transaction With an SBLC
Acquisition, development, or lease — an SBLC can backstop your obligations and unlock financing.
Talk To Financely About SBLCs for Real Estate
Share your deal type, facility size, and counterpart requirements. We will respond with scope, fees, and a structured plan for SBLC issuance.
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Disclaimer: This page is for information purposes only and does not guarantee issuance or funding. All SBLC facilities are subject to underwriting, bank approval, compliance review, and counterparty acceptance. Real estate transactions carry market, legal, and execution risk. Seek professional legal and tax advice before committing to any SBLC facility.