What is an SBLC (Standby Letter of Credit)?
A Standby Letter of Credit (SBLC) is a Bank-issued Guarantee in the Form of a Letter of Credit.
The issued Value for an SBLC is mostly between 5 - 300 Million EUR/USD.
An SBLC is issued by a Bank on behalf of it's Client and represents a Binding commitment to Pay a specified amount to a Beneficiary if the applicant fails to meet their Contractual obligations.
Some Myths about SBLC's:
Can I purchase an SBLC? ❌ No, an SBLC cannot be purchased.
Can I lease an SBLC? ❌ No, an SBLC cannot be leased.
Can I rent an SBLC? ❌ No, an SBLC cannot be rented.
👉 Important:
An SBLC is always issued directly from the Bank to it's respective Client.
An SBLC is not intended as a Regular Payment instrument, but as a Financial Safety net for Default situations.
An SBLC is always 100% backed by Real Money = Cash in the Bank.
Who is involved in an SBLC?
Applicant
– e.g. Buyer, Borrower, Project sponsor
Issuing Bank
– The Bank that issues the SBLC
Beneficiary
– e.g. Seller, Investor, Contractual partner
What is an SBLC used for?
SBLC's are widely used Worldwide, especially for Large transactions, International trade, and Long-term Contractual arrangements.
Common Applications:
- International Trade transactions
- Project financing
- Investment protection
- Payment or Performance guarantees
- Loan, or Credit line security
- Construction and Infrastructure projects
- Energy, Commodities, and Raw materials trading
Examples:
A Buyer secures Payment obligations to a Seller.
A Project developer provides Assurance to Investors.
A Bank requires an SBLC as Collateral for a Loan, or a Credit line.
📌 In practice, most SBLC's are never drawn, as their Presence alone provides Sufficient security.
Summary
A Standby Letter of Credit is an internationally recognized Bank instrument that guarantees Payment to a Beneficiary if the Applicant fails to fulfill Contractual obligations - providing maximum Security without immediate Payment
Take a look at the Technical process:
1. Step
Zoom Call
We discuss in a Private Consultation over Zoom your needs and work out if we are able to help you.
2. Step
Pre-Check
To be able to do a Pre-check of each respective Business case we need some Information and Documents from you.
The Documents you need to provide to do a Pre-Check are:
1. Full CIS from the Company who needs the respective SBLC
2. A Onepager from your Project as Project Discription
3. Formless Confirmation from your Bank that your Bank is able to receive and manage an SBLC
3. Step
Finalisation of the Contract
In this 3. Step the Contract between both Parties will be discussed, negotiated in details, and signed by both Parties.
After the Contract has been signed the Initial Invoice will be issued.
4. Step
Final Draft
After the Contract is signed by both Parties, and the Initial Fee has been paid - within 3 Banking Days the Final draft of the SBLC will be send for a Final check to the Client.
After the Final check, and "Go" from the Client is given, the SBLC will be sent out within 3 Banking Days to the Receiver Bank.
5. Step
Payment
After the SBLC has been sent out, and the Confirmation that it has been received is given, the Final Invoice will be issued and is to be Paid in full within 8 Banking Days.
Notice! The Initial Fee will be deducted from the Final Invoice total.
How does our Partnership work?
1
Appointment request
Request a Private Consultation and answer a few Questions about your current Situation.
Your Time Investment: 2 Minutes
2
Preliminary talk
A Member of our Strategy Team will speak with you on the Phone to find out how we can Partner together.
Your Time Investment: 15 Minutes
3
Free‒of‒Charge Strategy Meeting
One of our Partners will analyse your Situation and work with you to develop a tailored Solution and a Step-by-Step Plan for our Partnership.
Your Time Investment: 60 Minutes
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