Standby Letter of Credit Procedure
This is the short version of how Financely gets a real SBLC issued when you do not have enough collateral. We bring in a vetted collateral provider, draft the standby to ISP98, lock the cash path under escrow and account control, and coordinate issuance with a prime bank. You get a clean MT760 delivered to a verified beneficiary. No em dashes are used in this document.
Snapshot:
Sizes from 2 million USD. Performance, payment, and advance payment SBLCs. ISP98 drafting with objective evidence. Applicant indemnity and security plus margin. Funded collateral posted by a third party at the issuer. Four to six week cycle with ready files.
What Financely Handles For You
- Underwriting and screening on you and the beneficiary.
- Drafting the standby to ISP98 with precise draw conditions.
- Seating a collateral provider and confirming bank line allocation.
- Escrow agreement and account control agreement to govern cash movements.
- Closing coordination, SWIFT copies, and monitoring to expiry.
When This Procedure Fits
| Use Case |
Why It Works |
| Trade payment SBLC |
Supplier wants bank risk. We tie draws to shipment documents and invoice checks. |
| Performance SBLC for EPC or PPP |
Exposure steps down with certified milestones and escrowed flows. |
| Advance payment guarantee |
Refund triggers are objective. Escrow holds funds until delivery checkpoints. |
The Procedure In Six Steps
- Screening.
KYC on both parties, contract proof, beneficiary bank coordinates verified.
- Drafting.
ISP98 text with amount, tenor, expiry, and a clear evidence list for any draw.
- Security.
Applicant signs a reimbursement and indemnity agreement and provides margin or pledged assets.
- Controls.
Escrow and account control agreements are executed with sweep rules and signatories.
- Funding.
Collateral provider posts cash or eligible securities at the issuing bank. Allocation confirmed.
- Issuance.
Optional MT799 pre advice. MT760 sent. Closing pack delivered. Monitoring until expiry and release.
Pricing And Timing
| Item |
Typical Range Or Note |
| Upfront premium |
3 to 7 percent of face based on risk, tenor, and drafting quality |
| Annual fee if renewed |
2 to 3 percent while outstanding |
| Applicant margin |
10 to 40 percent in cash or security depending on profile |
| Timeline |
Four to six weeks with ready files and responsive stakeholders |
What You Need To Provide
- Corporate KYC and ownership chart.
- Executed or near final contract and award letters.
- Beneficiary details with legal name and SWIFT.
- Two years financials and recent bank statements.
- Willingness to sign indemnity and provide margin or security.
Ready To Start
Move to our core page to request a term sheet. We will review your file, seat a collateral provider, and coordinate issuance.
Go To Core SBLC Collateral Page
FAQ
Do you issue SBLCs yourselves
No. We structure and coordinate with regulated partners. Banks issue and hold collateral under control agreements.
Which rules do you use
ISP98 by default. UCP600 can be used if the beneficiary requests it. The goal is objective evidence and predictable draws.
Is there any way to avoid margin
Rarely. Margin or pledged assets are expected. It aligns incentives and covers first loss on a compliant call.
Can you work fast
Yes if the contract, KYC, and beneficiary details are ready. Four to six weeks is normal. Complex jurisdictions can take longer.
Financely structures, underwrites, and coordinates issuances with banks and investors through regulated partners. We do not issue letters of credit. Nothing here is a commitment to lend or invest. All transactions are subject to KYC, AML, sanctions screening, contract verification, and bank approvals. Terms and timelines vary by jurisdiction and counterparty readiness.