A Standby Letter of Credit (SBLC / SLOC) is a guarantee that is made by a bank on behalf of a client, which ensures payment will be made even if their client cannot fulfill the payment. It is a payment of last resort from the bank, and ideally, is never meant to be used. A standby letter of credit can be abbreviated either as SLOC or SBLC. How can a contractual (SBLC / SLOC) be used? 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. A standby letter of credit helps facilitate international trade between companies that don’t know each other and have different laws and regulations.
United States
An SBLC is commonly used to "back up" a loan or line of credit in order to show financial strength and secure payment to a creditor in case the client defaults. If the client defaults, the SBLC is called upon to pay the client´s obligations. Lenders and commercial creditors like this because it assures them that their loan, line of credit or sales transaction will be paid regardless of the actions of the borrower/purchaser. These SBLCs are insured to protect the investors if a default occurs but in many cases, SBLCs will qualify a client for a line of credit or loan they otherwise would not qualify for. Like the POFs, the SBLCs are individually backed by cash funds. ** Ask for a quote **
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