{"id":392,"date":"2020-05-18T16:10:37","date_gmt":"2020-05-18T16:10:37","guid":{"rendered":"https:\/\/grandcityinvestment.com\/?p=392"},"modified":"2020-05-18T16:10:37","modified_gmt":"2020-05-18T16:10:37","slug":"what-is-standby-letter-of-credit-sblc","status":"publish","type":"post","link":"https:\/\/grandcityinvestment.com\/en_US\/what-is-standby-letter-of-credit-sblc\/","title":{"rendered":"What is StandBy Letter of Credit (SBLC)?"},"content":{"rendered":"

What Is a Standby Letter of Credit (SLOC)?<\/span><\/span><\/h2>\n
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What is StandBy Letter of Credit (SBLC)?-Grand City Investment Limited<\/strong><\/p><\/div>\n

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According to\u00a0<\/span>https:\/\/www.investopedia.com\/terms\/s\/standbyletterofcredit.asp<\/a>\u00a0A\u00a0standby letter of credit\u00a0(SLOC) is a legal document that guarantees a bank’s commitment of payment to a seller in the event that the buyer\u2013or the bank’s client\u2013defaults on the agreement. A standby letter of credit helps facilitate international trade between companies that don’t know each other and have different laws and regulations. Although the buyer is certain to receive the goods and the seller certain to receive payment, a SLOC doesn’t guarantee the buyer will be happy with the goods. A standby letter of credit can also be abbreviated SBLC.<\/span><\/div>\n
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How a Standby Letter of Credit Works<\/span><\/span><\/h2>\n
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A SLOC is most often sought by a business to help it obtain a contract. The contract is a “standby” agreement because the bank will have to pay only in a worst-case scenario. Although an SBLC guarantees payment to a seller, the agreement must be followed exactly. For example, a delay in shipping or a misspelling a company’s name can lead to the bank refusing to make the payment.There are two main types of standby letters of credit:A financial SLOC guarantees payment for goods or services as specified by an agreement. An oil refining company, for example, might arrange for such a letter to reassure a seller of crude oil that it can pay for a huge delivery of crude oil.<\/span><\/p>\n<\/div>\n

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