1 / 13

How to Obtain a Standby Letter of Credit?

The SBLC standby letter of credit process is similar to that of obtaining a commercial loan, with a few key differences.

hansongroup
Télécharger la présentation

How to Obtain a Standby Letter of Credit?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. SBLC Standby Letters of Credit Can Help Establish Trust With Your Business Partners

  2. The SBLC standby letter of credit is an irrevocable documentary commitment, separate from the sales contract, issued by the bank to a third-party beneficiary and promising to pay on behalf of the originator a specific sum of money against delivery of documents satisfying the terms and conditions of the SBLC. • It can be used for import and export transactions. • It is particularly suitable for existing business relationships where the two parties have already built up trust.

  3. Financing for your small business isn’t always easy to come by—but it’s important to look down every avenue of opportunity; you might not be aware of one of the most powerful financing tools out there. • Standby letters of credit can help your business in tough contractual and financial situations, making people more likely to sign contracts and do business with you.

  4. What is a SBLC Standby Letter of Credit? • A SBLC standby letter of credit is a guarantee of payment by a bank on behalf of their client. It is a loan of last resort in which the bank fulfills payment obligations by the end of the contract if their client cannot. • The standby letter of credit is never meant to be used, but prevents contracts from going unfulfilled in the event your company closes down, declares bankruptcy, or is unable to pay for goods or services provided. Standby letters of credit help prove a business’ credit quality and repayment abilities.

  5. Types of SBLC Standby Letters of Credit • Performance SBLC standby letter of credit • Performance standby letters of credit ensure the nonfinancial contractual obligations (quality of work, amount of work, time, cost, etc.) are performed in a timely and satisfactory manner. If these obligations are not met, the bank will pay the third party in full. • Financial SBLC standby letter of credit

  6. How to Obtain a SBLC Standby Letter of Credit • The standby letter of credit process is similar to that of obtaining a commercial loan, with a few key differences. • As with any business loan, you will need to provide proof of your creditworthiness to the bank. • However, the SBLC standby letter of credit approval process is much quicker, with letters often being issued within a week of all paperwork being submitted.

  7. Unlike traditional loans, the bank will require a standby of letter of credit fee of between 1-10% of the SBLC amount before issuing the letter. • This fee is usually charged per year that the letter of credit is in effect. • If the terms of the contract are fulfilled early, you can cancel the SBLC standby letter of credit without incurring additional charges.

More Related