22 Aug Leased Standby Letter of Credit Providers
Leased Standby Letter of Credit Providers
What Is a Leased Standby Letter of Credit (SBLC)?
A Leased Standby Letter of Credit (SBLC) is a Standby Letter of Credit (SBLC), which is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer, looking to secure the Standby Letter of Credit. Following this it will lease a letter of credit to that customer for a set amount of money and over a set period of time (typically less than two years).
Leasing Standby Letters of Credit (SBLC) or Leasing Bank Guarantee’s (BG) are common phrases associated with Collateral Transfer. However, leasing is not really the correct term to use as it is not possible to actually lease a Standby Letter of Credit in this manner.
It is a misnomer. We use the term loosely as its process is almost exactly that of commercial leasing. In effect, the Provider offers temporary ownership of his assets to the Beneficiary in return for a fee and at the end of the term the assets revert back to the ownership of the Provider. The assets are used to raise specific and non-transferable bank indemnities which the Beneficiary may utilise.
It is a misnomer as in effect no leasing takes place. Through a Collateral Transfer Agreement, a Provider will agree to place his assets with a facilitating bank. The bank will charge the asset and will raise a bank indemnity against it in favour of the Beneficiary. This bank indemnity will commonly be in the form of a Bank Guarantee issued specifically for the purpose to the Beneficiary.
These Collateral Transfer (or C/T) facilities are useful for when a business needs to import or create security (collateral) to underpin credit lines or loans, otherwise referred to a monetization.
What Is a Standby Letter of Credit (SBLC)?
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.
The Standby Letter of Credit serves a different function than the commercial letter of credit or Documentary Letter of Credit (DLC).
The Documentary Letter of Credit (DLC) is a primary payment instrument for a transaction.
The Standby Letter of Credit (SBLC) serves as a secondary payment instrument.
So how does it work?
A bank will issue a Standby Letter of Credit on behalf of a client to provide assurances of his/her ability to perform under the terms and conditions of a contract between the client and the beneficiary.
The parties involved with the transaction do not expect that the Standby Letter of Credit (SBLC) will ever be drawn upon.
The Standby Letter of Credit guarantees the beneficiary of the performance of the client’s obligation. The beneficiary is able to draw under the credit by presenting documents and evidence to the issuing bank that the client has not performed its obligation.
The issuing bank is obligated to make payment if the documents presented comply with the terms and conditions of the Standby Letter of Credit.
Click Here to Get A Stanby Letter Of Credit From One Of Our Top World Banks
Standby Letter of Credit: A Backup Plan for Payment
A bank providing a letter of credit should be a disinterested third party. If the bank’s customer fails to satisfy specific terms of an agreement, the bank—not the customer who failed to deliver—pays the beneficiary. Because it is credit, the customer ultimately is responsible for repaying the bank.
SBLCs, like standard letters of credit, are useful for international trade as well as domestic transactions like local building projects. Should something unforeseen prevent terms of a deal to be completed, the SBLC ensures financial obligations to a beneficiary are met.
Examples
There are two main types of SBLCs—those that are financial-based and those that are performance-based:
- Financial: An exporter sells goods to a foreign buyer, who promises to pay within 60 days. If the payment never arrives, the exporter can collect payment from the foreign buyer’s bank per the terms of the SBLC. Before issuing the letter, the bank typically evaluates the buyer’s credit and determines that the business will repay the bank. For customers whose credit is in question, banks may require collateral or funds on deposit for approval.
- Performance: A contractor agrees to complete a construction project within a certain timeframe. When the deadline arrives, the project is not complete. With an SBLC in place, the contractor’s customer can demand payment from the contractor’s bank. That payment functions as a penalty to encourage on-time completion, funding to bring in another contractor to take over mid-project, or compensation for the headaches of dealing with problems.
How the Process Works
An importer makes a deal with a vendor to ship him 10,000 widgets on open credit. The vendor wants to protect her organization against the importer failing to deliver on his promises and asks him to obtain a letter of credit as part of their agreement.
The importer asks his bank for an SBLC, and because he has excellent credit and collateral, the bank issues the letter and sends it to the vendor’s bank. She reviews the letter to make sure it is acceptable and decides to proceed with the deal.
If the importer fails to meet his obligations, the vendor submits documentation to the importer’s bank as required by the SBLC. The importer’s bank then pays the vendor, and the importer will have to repay his bank.
Security Provided
By making a third-party bank responsible for payment, the beneficiary becomes more confident that she’ll get paid. Using an export transaction as an example, there are numerous reasons why the buyer might not pay:
- The buyer has a cash-flow crunch and is waiting on payment from his own customers.
- The buyer goes out of business.
- The buyer’s assets get frozen due to political instability or unrest.
- The buyer is unhappy with the seller.
- The buyer is dishonest.
A bank is financially more stable than most buyers, and the bank does not concern itself with disputes between buyers and sellers. Instead, the buyer and seller agree to certain conditions that trigger payment, and the bank follows directions if those events occur.
An SBLC must be paid as long as the beneficiary meets the letter’s requirements and the bank is still in business. If the beneficiary is worried about the issuing bank’s financial stability, she can request a confirmed letter of credit. In that case, a bank that the beneficiary trusts guarantees the payment on behalf of another, less-trustworthy bank.
SBLCs Vs. Other Letters of Credit
An SBLC is similar to a standard letter of credit: A bank promises to pay a beneficiary as long as the beneficiary provides documents and meets the requirements of the letter of credit. Still, there are key differences:
- Backup plan: An SBLC is a safety net. Like most safety nets, the goal is to avoid using it. When somebody gets paid with an SBLC, it means something went wrong. With a standard letter of credit, on the other hand, everybody involved hopes and expects that payment will occur. For example, those letters pay when an exporter successfully delivers a shipment to an importer.
- Performance aspect: SBLCs also are unique because they can include a performance component—or negative performance, if you prefer. If a service is not performed, the beneficiary gets paid.
- In-country: SBLCs are used frequently for domestic transactions. Those might include everything from building projects to receiving electricity services. Commercial letters of credit are more common in international trade
How can a contractual SBLC be used?
An SBLC is frequently used as a safety mechanism for the beneficiary, in an attempt to hedge out risks associated with the trade. Simplistically, it is a guarantee of payment which will be issued by a bank on the behalf of a client. It is also perceived as a “payment of last resort” due to the circumstances under which it is called upon. The SBLC prevents contracts going unfulfilled if a business declares bankruptcy or cannot otherwise meet financial obligations.
Furthermore, the presence of an SBLC is usually seen as a sign of good faith as it provides proof of the buyer’s credit quality and the ability to make payment. In order to set this up, a short underwriting duty is performed to ensure the credit quality of the party that is looking for a letter of credit. Once this has been performed, a notification is then sent to the bank of the party who requested the Letter of Credit (typically the seller).
In the case of a default, the counter-party may have part of the finance paid back by the issuing bank under an SBLC. Standby Letter of Credit’s are used to promote confidence in companies because of this.
This Is How To Find Genuine Standby Letter of Credit (SBLC) / Bank Guarantee (BG) Providers
Who Are The Leased Standby Letter of Credit Providers?
Leased Bank Guarantee Providers are banks and other financial institutions such as Grand City Investment Limited that issue or provide Standby Letters of Credit to customers. Grand City Investment Limited are Lease Standby Letter of Credit Providers, Top SBLC Providers, Real sblc Providers, Genuine Bank Instruments Providers as well as lease sblc providers.
As Genuine Bank Instrument providers, all our leased bank instruments such as bank guarantees (BG) and standby letters of credit (SBLC) are issued by World’s rated Top 25 Banks. We use the Bank SWIFT Network to have the leased bank guarantee (BG) and standby letter of credit (SBLC) delivered to the beneficiary’s bank account by SWIFT MT799 followed by SWIFT MT760. We operate an extremely reliable, efficient delivery and authentication process.
We can issue any bank instrument (bg/sblc) from any of the worlds biggest banks in France, Germany, London, Paris, New York, Spain, Italy, Malaysia, Indonesia, Turkey, Hong Kong, Singapore or USA. We can also monetize any bank instrument such as bg or sblc. The bg/sblc monetization arrangement issues non recourse loans to the customer shortly after the bg/sblc is delivered to the monetizer.
CLICK HERE TO MONETIZE YOUR BANK INSTRUMENTS (BG/SBLC) FROM PRIME BANKS.
Leased Standby Letters of Credit and Determining Credit-Worthiness
To determine if a borrower is worthy of a leased Standby Letter of Credit, many banks will undertake a credit analysis. Credit analyses focus on the ability of the organization to meet its debt obligations, focusing on default risk. Lenders like Grand City Investment Limited will generally work through the five C’s to determine credit risk: the applicant’s credit history, capacity to repay, its’ capital, the loan’s conditions, and associated collateral. This form of due diligence can revolve around liquidity and solvency ratios. Liquidity measures the ease with which an individual or company can meet its financial obligations with the current assets available to them, while solvency measures its ability to repay long-term debts. Specific liquidity ratios a credit analyst may use to determine short-term vitality are current ratio, quick ratio or acid test, and cash ratio. Solvency ratios might entail the interest coverage ratio.
Global Market For Leased Bank Financial Instruments Especially Standby Letters of Credit
Many top worldwide banks will lease Standby Letters of Credit and bank guarantees, usually with a minimum amount of $5 million to $10 million, all the way up to $10 billion and more.
Grand City Investment Limited are genuine providers of leased bank guarantee and Leased SBLC at 4% annual leasing fee. These Leased Bank Instruments can be obtained at minimal expense to the borrower compared to other banking options. This offer is open to both individuals, SME’s and corporate bodies. We also provide loans and international project funding, our loan interest rate is only 3% per year.
Description of Instruments:-Bank Guarantee {BG} / StandBy Letter of Credit {SBLC}
1. Instrument: Fully Cash Backed Bank Guarantee {BG} / StandBy Letter of Credit {SBLC}
2. Total Face Value: Eur/USD 1Million (Min) to Eur/USD 5 Billion (Max)
3. Issuing Bank: HSBC London/Hong Kong, Barclays Bank London, Citibank New York, Deutsch Bank Germany or any AAA Rated Bank.
4. Age: One Year and One Day (with rolls and extensions where applicable)
5. Leasing Price: 4% of Face Value plus 2% brokers commission (Applicable only if there are brokers in the transaction)
6. Delivery: SWIFT MT-760
7. Payment: MT103 Swift Wire Transfer
8. Hard Copy: Bank Bonded Courier within 7 banking days.
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Our bank instrument can be engaged in PPP Trading, Trade Finance, Import & Export Transactions, Discounting and Monetization, signature project (s) such as Aviation, Agriculture, Petroleum, Telecommunication, construction of Dams, Bridges, Real Estate and all kinds of projects.
As leading sblc providers, we deliver with time and precision as set forth in the deed of agreement (DOA). Our bank guarantee and Standby Letters of Credit terms and Conditions are reasonable, below is our instrument description.
Once the transaction is in progress, we ensure we keep you posted on the progress of your paper. Instead of stressing yourself out looking for a financial instrument or company why not let professionals like us deliver financial instruments to you within the time frame required by you.
OUR SERVICES ARE:
Loans: (Non Recourse Loans, Business Loans, Secured Loans, Unsecured Loans, International Project Financing)
Purchase Bank Instruments (Bank Guarantees and Standby Letter of Credit)
Lease Bank Instruments (BG, SBLC, DLC, Letters of Credit)
Letters of Credit (DLC, L/C, Usance LC)
Investments and Wealth Management
Insurance Underwriting Services
PPP and Trading Platforms
Corporate Finance
BROKER INQUIRIES ARE WELCOMED AND APPRECIATED: Our brokers receive 2% commission for referral. Daisy Chains of Brokers, Scammers & Time Wasters Will Not Be Entertained. We assist Clients and brokers in their attempt to secure funding by working on their funding requests that may require innovative financing.
We would welcome the chance to earn your trust and deliver you the best financial service in the industry. Have a look at our portfolio here: https://grandcityinvestment.com/portfolio/
Contact us today to know how a Leased Standby Letter of Credit mt760 from barclays bank, hsbc bank, Chase Bank, Standard Chartered Bank or Bank of America can help you conclude worthy deals with your suppliers and contractors.
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