Standby Letter of Credit Procedure
Standby Letter of Credit Procedure
A standby letter of credit (SBLC) is a financial instrument issued by a bank on behalf of a client to guarantee payment to a beneficiary in the event that the client fails to meet a contractual obligation.
SBLCs are commonly used in international trade transactions to protect the seller from the risk of non-payment by the buyer.
Procedure for Obtaining a Standby Letter of Credit
The following is a general overview of the procedure for obtaining a standby letter of credit:
- Contact Financely. We will connect you with a network of banks that are willing to issue SBLCs.
- Submit an SBLC application to the issuing bank. This will typically include information about the buyer, seller, beneficiary, and transaction, as well as the amount of the SBLC and the terms and conditions.
- Work with Financely to raise collateral. If you do not have enough collateral to back your SBLC application, we can help you identify potential sources of collateral, such as asset-backed lending or trade finance facilities.
- Provide collateral to the issuing bank. Once you have raised the necessary collateral, you will need to provide it to the issuing bank.
- Pay the issuance fee. This fee is typically a percentage of the amount of the SBLC.
- Receive the SBLC. Once the bank has received your collateral and issuance fee, they will issue the SBLC to the beneficiary.
Benefits of Using Financely's Services
- Access to a network of banks that are willing to issue SBLCs
- Assistance with the SBLC application process
- Assistance with raising collateral for the SBLC
- Negotiation of the terms and conditions of the SBLC
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