We provide lender-ready capital raise packaging and debt or equity placement support for business owners and buyers looking to secure serious term sheets and close funding on a defined timeline.
For business owners and acquirers pursuing private debt or equity, submit your deal for review. We revert within one working day with next steps and either a quote for our services.
For pre-submission discussions, we offer paid consultations. To initiate underwriting and lender outreach, submit the deal.
Trade Finance Instruments
An SBLC is a bank’s contingent obligation to a beneficiary. It is not funding, and it is not issued on promises.
If a compliant demand is presented, the issuing bank must pay. That is why SBLCs are underwritten like credit.
ICC rules most commonly used include ISP98 and, in some structures, UCP 600.
A Standby Letter of Credit (SBLC) is a conditional payment undertaking issued by a bank at the request of its client (the applicant) in favor of a counterparty (the beneficiary). The SBLC is designed to be drawn only if the applicant fails to perform or fails to pay under the underlying contract.
The operational point that matters is simple. If the beneficiary presents a demand that complies with the SBLC terms, the issuing bank is obligated to honor. That exposure drives everything else: underwriting, collateral, fees, tenor, wording discipline, and draw conditions.
Reality check: In serious markets, an SBLC is treated as bank risk. Banks assess the applicant’s ability to reimburse a draw and the enforceability of recourse. That is why “non collateral SBLC” language is often misleading. What is real is “not 100% cash collateral,” subject to underwriting.
Related reading: How to Fund a Procurement Deal With No Cash Upfront.
| Type | Typical Purpose |
|---|---|
| Financial SBLC | Backstops payment obligations such as invoices, leases, or repayment schedules. Draw is tied to non-payment events defined in the SBLC. |
| Performance SBLC | Backstops performance obligations such as delivery, completion, or service levels. Often includes expiry dates and reduction mechanics. |
| Direct Pay SBLC | Written to allow draw on presentation with minimal narrative. Higher risk for issuers and typically requires stronger collateral support. |
| Counter SBLC | Used where one bank issues a standby to support another bank’s issuance to the end beneficiary, often in cross-border setups. |
When an SBLC is drawn, the issuing bank pays first and seeks reimbursement from the applicant. That creates a credit exposure that consumes bank risk capacity and regulatory capital. Banks therefore underwrite the applicant and require a support package they can enforce.
The support package usually includes some combination of cash margin, eligible collateral, guarantees, and covenant controls. The exact blend depends on the applicant profile, country risk, beneficiary profile, tenor, and whether the SBLC is written as a tighter demand instrument.
Businesses can obtain SBLCs without fully depositing cash equal to the SBLC face value when they can demonstrate bankable reimbursement capacity and provide alternative support acceptable to the issuer. This is common in corporate banking for stronger borrowers, and it is also achievable for smaller firms if the structure is disciplined and the file is lender-ready.
The cleanest path is issuance under a revolving credit facility or trade line where SBLC issuance is an allowed sublimit. In that case, the SBLC consumes facility availability rather than requiring a 100% cash deposit. This still requires covenants, reporting, and credit approval.
Practical constraint: if the facility is already drawn, there may be no availability for SBLC issuance.
Some issuers will accept partial cash margin where the borrower has stable cash flows, strong financials, and clean documentation. The rest of the exposure is supported by recourse, covenants, and enforceable remedies.
Practical constraint: higher risk profiles drive margin upward and reduce tenor appetite.
In certain cases, a bank may accept security over eligible collateral such as receivables, cash flows under controlled accounts, or inventory already owned and controlled under a defensible security package. The keyword is owned and controllable.
Practical constraint: future goods, expected receipts, or assets outside enforceable jurisdictions are usually not acceptable.
A strong sponsor, parent entity, or creditworthy guarantor can reduce cash requirements. Issuers care about enforceability, financial strength, and clarity of guarantee wording.
Practical constraint: weak guarantees do not change collateral appetite.
SBLC disputes usually come from sloppy wording. Banks and beneficiaries focus on draw mechanics, expiry, governing rules, and presentation conditions. If the SBLC is governed under ICC standards such as ISP98, the drafting should be consistent with that framework.
| Clause Area | What Needs to be Clear |
|---|---|
| Governing Rules | Explicit reference to ISP98 or UCP 600, plus governing law and jurisdiction where relevant. |
| Draw Conditions | Exact documents required for a complying presentation. Avoid vague “proof of default” language. |
| Expiry and Auto-Extension | Hard expiry date or evergreen mechanics, plus notice requirements and cutoffs. |
| Reduction Schedule | Where performance risk declines over time, a reduction schedule can cut collateral and capital cost. |
| Transferability | Whether the SBLC can be transferred, assigned, or drawn by successors in contract. |
SBLC outcomes are driven by file quality and speed. The issuer wants a coherent credit story and clean documentation that stands up under KYC, AML, and sanctions screening.
Internal links: If you want to understand our execution process, review How Our Platform Works and the term-sheet-led decisioning approach described in Deal Packaging and Lender Outreach to Get Term Sheets.
If you have a defined beneficiary, a real underlying contract, and a clear timeline, we can assess bankability, draft the structure, and drive issuer decisioning through regulated partners. The output standard is written terms or written decline reasons. No outcomes are promised.
Submit your SBLC request with the underlying contract, beneficiary details, requested amount and tenor, and your available documents. If it fits, we will revert with indicative terms and the execution steps.
Financely acts as an advisor and arranger through regulated partners. We are not a bank and do not issue SBLCs. All engagements are subject to underwriting, KYC, AML, sanctions screening, issuer criteria, and definitive documentation. This article is for general information only and is not legal, tax, or regulatory advice.
Financely advises growth-focused businesses on accessing capital by introducing their opportunities to professional investors. Financely is not a securities broker or dealer. Where appropriate, engagements are coordinated with regulated broker-dealers, investment banks, legal counsel, and other specialists.
Financely does not solicit, offer, or accept orders to buy or sell securities and makes no assurance regarding capital-raising outcomes.
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All mandates start with an RFQ. We review submissions, issue a brief Go/No-Go memo, and where bankable, release a Term Sheet that leads to funding. We arrange capital across Senior Secured, Unitranche, Second Lien/Mezzanine, Preferred Equity, and Gap Solutions. We do not process deals by email or chat.
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