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.

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.

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.

Involved Parties: Applicant – e.g. Buyer, Borrower, Project sponsor Issuing Bank – The Bank that issues the SBLC Beneficiary – e.g. Seller, Investor, Contractual partner

Process: The Applicant applies for an SBLC through their Bank. The Bank evaluates Creditworthiness, Collateral, or Cash coverage. The Bank issues the SBLC in favor of the Beneficiary. The Beneficiary relies on the SBLC as Assurance of payment. Only if the Applicant defaults may the Beneficiary draw on the SBLC.

📌 In practice, most SBLC's are never drawn, as their Presence alone provides Sufficient security.

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 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.