A Standby Letter of Credit (SBLC) is a bank’s commitment of payment to a third party in the event that the banks’s client defaults on an agreement. It is a ‘standby’ agreement because the bank will have to pay only in a worst-case scenario. A SBLC can be used to guarantee the supplier in commercial transaction (import-export), to improve up the project financing structure bringing it to a bankability stage, drawn down a loan or simply to trigger a credit line from the Bank.
SBLC is a Collateral Facility which can be used also to raise funds through a so called non-recourse loan. A non-recourse loan can be structured with Monetization option only or the Owner/Lessee has the opportunity to be accepted on Trade which is managed on a Private Placement basis and which normally runs for 10 Months.
Furthermore, a SBLC is most often sought by a business to help it obtain a contract. The recipient of a standby letter of credit is assured that it is doing business with an individual or company that is capable of paying the bill or finishing the project. In the worst-case scenario, the bank issuing the SBLC will fulfil its client’s obligations.
What you can to do, if you are interested to become the Beneficiary of a SBLC, is to read our page (updated time-by-time) were you can choose the transaction procedure that best suite according your needs and requirements.
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