Need Of SBLC and Its Importance

1. SBLC and Its Importance – The Need

2. When you opt for international trade, it creates risks for both the parties. Both the buyer and the seller go through the issues like different language, customs and currency and it is obvious to be skeptical in this regard. • However, the international trade does bring a lot of benefits to both the parties and that is the reason why the international trade is popular among people. • While both the parties seek for transaction benefits, the same way they also look for a protection which is very important in order to get a smooth transaction. • The best way to protect the transaction and the trade is to use the bank instrument called Standby Letter of Credit (SBLC).

3. So what is SBLC? • SBLC or the standby letter of credit is basically a bank instrument that is used for the repayment of the goods and services used by the buyer. • Getting confused? Think about a situation where you are doing an international trade. Now think that you have already used the services and goods from the seller, but when the time comes you are unable to pay the money to the buyer. • What will you do? The bank however, comes to your rescue and issue a bank guarantee known as the SBLC.

4. Two Content Layout with Table • First bullet point here • Second bullet point here • Third bullet point here

5. The SBLC is basically a bank guarantee that is provided by the bank which says the bank will pay on behalf of the buyer to the seller in case the payment is default. • However, there are a few differences between an SBLC and a letter of credit. • Where the LOC or the Letter of Credit treats both the buyer and seller equally; the SBLC outs the buyer in a slightly lower position. There are a lot of benefits of using the SBLC. They are as followed –

6. .

7. You get more protection – A lot of people use SBLC because of the protection that it provides. However, another best thing about these bank instruments is the ability to provide simplest way of transaction to the seller like a bank transfer. The more protection to the seller is they are sure that they will definitely get the money due. If the buyer doesn’t pay, the bank will. Low cost – SBLC fees are quite lower than compared to other bank instruments and that is one of the reasons people use SBLC.

8. A bridge of trust – Sellers tend to go for business with unknown people who have an SBLC. This is another great thing about the SBLC.