What is an SBLC (Standby Letter of Credit)?
A Standby Letter of Credit (SBLC) is a Bank-to-Bank Guarantee in Form of a Letter of Credit directly issued from the Issuing Bank to the Receiving Bank.
The issued Value for one single SBLC is mostly between 5 - 300 Million EUR/USD.
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 Issuing Bank to the Receiving Bank for it's respective Client as Bank-to-Bank Guarantee.
An SBLC is not intended as a Regular Payment Instrument, but as a Collateral or Financial Safety net.
An SBLC is always 100% backed with Real Money = Cash in the Bank.
An SBLC is like Equity in your Companies Balance Sheet.
Who is involved in an SBLC?
Business Partner, Investor
– e.g. Investor, Buyer, Contractual Partner 1
Issuing Bank
– The Bank that issues the respective SBLC
Receiving Bank
– The Bank that receives and manages the SBLC for it's respective Client
Beneficiary, Client
– e.g. Client, Project Owner, Seller, Contractual Partner 2
What is an SBLC used for?
SBLC's are widely used Worldwide, especially as Collateral for large Transactions, International Trade, and Long-term Contractual Arrangements.
Common Applications:
- International Trade Transactions
- International Project Financing
- Investment Protection
- Payment or Performance Guarantees
- Equity in your Balance Sheet for 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-to-Bank Instrument that Guarantees a Collateral to a Beneficiary - providing maximum Security without immediate Payment
Take a look at the Technical Procedure:
1. Step
Zoom Call
We discuss in a Private Consultation over Zoom your needs and work out if we are able to help you.
If we are able to help you we will explain our Procedures and how to work together.
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
Negotiation of the Contract
After a successful Pre-Check, in this 3. Step the Contract between all involved Parties will be discussed, negotiated in details, and signed by all Parties.
4. Step
Initial Invoice will be issued
In this 4. Step after the Contract has been signed the Initial Invoice will be issued and paid by the Client.
5. Step
Final Verbiage Draft and Delivery
After the Initial Fee has been paid - within 3 Banking Days the Final draft of the Verbiage will be send for a Final check to the Client.
After the Clients Final check, and "Go" from the Client is given, the SBLC will be sent out within 3 Banking Days to the Receiver Bank.
6. Step
Final 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 Consulting 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 Consulting Partnership.
Your Time Investment: 60 Minutes
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