The (SBLC/SLOC) standby letter of credit is a bank’s assurance of the payments on behalf of a customer. This type or instrument is the last resort wherein the bank meets payment commitments by the contract’s conclusion, if the customer fails to or cannot do so. SLOC or SBLC are two abbreviations for a backup letter of credit. The commercial letter of credit or Documentary Collection is not the same as the standby letter of credit.
What is a Provider of Standby Letters of Credit?
A company like the Grand City Investment Limited that offers (SBLC MT760) Standby Letter Of Credit Providers and other bank financial products to its clients is a Standby Letter of the Credit Provider (SBLC MT760). As a result, Grand City Investment Limited is now a provider of standby letters of credit, BGSBLC, SBLC Monetizes, & SBLCMT760.
Types of Standby Letters of Credit:
As you can see, there are several types of Standby Letters of Credit:
The financial standby LOC (SBLC) is created when an exporter sells products to a foreign customer who agrees to pay within few months. The exporter can recover payment from the importer’s bank if the money never comes (and the buyer uses a standby letter of credit to guarantee the payment).
A Trade Finance Service Provider commits to execute any infrastructure project within a specific timeframe under the terms of a performance standby LOC (SBLC). If the project is not finished or completed by the deadline, the contractor’s client might want the payment from the contractor’s bank if the contractor gets a standby credit letter in place. This payment serves as a penalty for one time completion. These funds will be drawn or paid and are brought in to fund the deficit or to pay other contractors to take over the work in the middle, or to meet payment for the difficulties of dealing with issues of non completion or delay in completion.
Benefits of the Standby Letter of Credit:
OIB ensures that the buyer receives the products or services specified in the contract. For example, if a contractor asks for the construction period and the contractor needs to be paid , the customer can show the SBLC to a bank to be reimbursed. Another benefit of SBLC in global trade would be that a buyer may be more confident that the seller will deliver the products.