Standby Letter of Credit (SBLC)
A Standby Letter of Credit (SBLC) is a guarantee of payment issued by an issuing bank on behalf of a client that is used as a “last resort payment” should the client fail to fulfill a contractual commitment with a third party.
Standby Letters of Credit (SBLC) are issued as a sign of good faith in business deals and are used as proof of a client’s credit capability and repayment abilities.
The bank issuing the SBLC will perform a brief underwriting procedure to ensure the creditworthiness of the party applying for the Standby Letter of Credit, before issuing the SBLC to its beneficiary.
Yelsen Finance Holdings Limited (Hong Kong) assures a standby letter of credit to all its customers without facing any sort of difficulties. A standby letter of credit is a guarantee that a bank or a financial institution provides under which a beneficiary is paid on behalf of a client when an applicant defaults. This financial instrument is among the most preferred and flexible tools for making secure payments. A standby letter of credit came through as a legal limitation imposed by a US regulator on the authority of a bank to provide guarantees.
The standby letter of credit has gained a lot of popularity for international trade. It provides an assurance or a guarantee that the party will get the payment no matter what the circumstances are. We at Yelsen Finance Holdings Limited (Hong Kong) ensure that all our customers do not face any sort of difficulties or hassles. Our trade finance experts will provide you with the needed guidance.
The standby letter of credit is further divided into different types. These are as below:
- A performance standby
- A direct-pay standby
- An advance-payment standby
- A bid-bond or tender-bond standby
- A counter standby
- A financial standby
- An insurance standby
- A commercial standby