19 Oct Standby Letter of Credit Provider

Who is a Standby Letter of Credit Provider?

What is a Standby Letter of Credit (SBLC/SLOC)?

A standby letter of credit (SBLC/SLOC) 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. A standby letter of credit can also be abbreviated SBLC or SLOC. A standby letter of credit is different from a Commercial Letters of Credit.

Differences Between Standby Letter of Credit and Commercial Letters of Credit

A letter of credit (LC), also known as a documentary credit or bankers commercial credit, or letter of undertaking (LoU), is a payment mechanism used in international trade to provide an economic guarantee from a creditworthy bank to an exporter of goods. Letters of credit are used extensively in the financing of international trade, where the reliability of contracting parties cannot be readily and easily determined. Its economic effect is to introduce a bank as an underwriter, where it assumes the counterparty risk of the buyer paying the seller for goods. The Standby Letter Of Credit (SBLC) is governed by a set of guidelines known as the Uniform Customs and Practice (UCP 600), which was first created in the 1930s by the International Chamber of Commerce (ICC).

So What Is The Key difference: The ‘Letter of Credit’ and the ‘Standby Letter of Credit’ are two legal bank documents that are used by international traders. Both these letters are used to ensure the financial safety between the supplier and their buyers. And, SBLC is a type of LC that is used when there is a contingent upon the performance of the buyer and this letter is available with the seller to prove the buyer’s non-performance during the sale.

top letters of credit providers, real SBLC Providers, genuine SBLC providers, lease sblc providers, lease bg sblc providers, bank instrument providers, Financial SBLC, Financial SBLC provider, Financial SBLC, SBLC discounting, SBLC Monetizers, HSBC LC and SLBC are the two financial instruments that are meant to safeguard the financial interests of the international traders i.e. buyers and sellers. It simply means that both these terms are widely useful while making transactions between the two trading parties. These help in giving financial security to both the parties. Also, these contracts are produced in good faith and in both the cases the fund gets mobilized.

During a transaction, the buyer wants an assurance of receiving his product or merchandise on time, and the seller wants his security of being paid on time at the completion of the job. Here, a letter of credit is issued, for it is an assurance or a type of guarantee that the seller will receive his correct payments in time by the clients. The LC solves both the issues by bringing in the buyer’s and seller’s banks into the transaction.

The issuing bank of the buyer, then, opens a LC in the favor of the seller and states that the seller will be paid and that he or she will not suffer any damages or losses because of the non-payment of the buyer. Though, the money transfer to the seller will only be initiated after all the conditions or documents of the contract are completed. However, the bank also safeguards the interest of the buyer by not paying the supplier until it receives a confirmation from the supplier that the goods have been shipped.

Based on this, there are two types of LCs being issued, they are:

Documentary Letter of Credit (DLC) and
StandBy Letter of Credit (SBLC)
Now, the DLC depends on the performance by the supplier, whereas SBLC depends on the non-performance or default on the part of the buyer.

The purpose of this letter is to establish a bank guarantee for the deal or transaction with a third party. For example, if an individual wishes to take a loan, but does not have a sufficient credit standing, the bank may then ask for a guarantee from another party (third party), and this is done in the form of a standby letter of credit that is issued by another bank. However, the said individual would then have to produce certain documents or evidence to support the non-performance of the buyer to obtain the payment through the SBLC.

The bank is obligated to make payment if the documents presented comply with the terms of contract. Though, the SBLC are considered very versatile and can be used with modifications to suit the interests and requirements of the buyers and sellers.

Standby Letter of Credit in foreign trade

Standby Letter of Credit Types:

Financial standby LOC: An exporter sells goods to a foreign buyer, who promises to pay within 60 days. If the payment never arrives (and the exporter requires the buyer to use a standby letter of credit) the exporter can collect payment from the importer’s bank. Before issuing the letter of credit, the bank typically evaluates the importer’s credit and determines that the importer will repay the bank. But if the customer’s credit is in question, banks may require collateral (or funds on deposit) for approval.

Performance standby LOC: A contractor agrees to complete a construction project within a certain timeframe. When the deadline arrives, the project is not complete. With a standby letter of credit 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. This is an example of a “performance” standby letter of credit, and a failure to perform triggers the payment.

Standby Letter of Credit Advantages:

An SBLC helps ensure that the buyer will receive the goods or service that’s outlined in the document. For example, if a contract calls for the construction of a building and the builder fails to deliver, the client presents the SLOC to the bank to be made whole. Another advantage when involved in global trade, a buyer has an increased certainty that the goods will be delivered from the seller.

Also, small businesses can have difficulty competing against bigger and better-known rivals. An SBLC can add credibility to its bid for a project and can oftentimes help avoid an upfront payment to the seller.

The SBLC / SLOC is often seen in contracts involving international trade, which tend to involve a large commitment of money and have added risks.

For the business that is presented with a SLOC/SBLC, the greatest advantage is the potential ease of getting out of that worst-case scenario. If an agreement calls for payment within 30 days of delivery and the payment is not made, the seller can present the SLOC to the buyer’s bank for payment. Thus, the seller is guaranteed to be paid. Another advantage for the seller is that the SBLC reduces the risk of the production order being changed or canceled by the buyer.

Standby Letter of Credit Uses:

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 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/sloc 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 sblc/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. Standby letters of credit can help establish trust with your business partners and be a powerful tool to help meet your business goals.

Follow this link to apply for a Standby Letter of Credit from prime banks

Standby Letter of Credit Cost 

At Grand City Investment Limited, Standby Letter of Credit costs 4% of the SBLC amount per year and if the sblc is needed for more than one year, there will be an option of rolls and extensions where applicable. If the terms of the contract are fulfilled early, the customer can cancel the Standby Letter of Credit without incurring additional charges.

What is Standby Letter of Credit (SBLC) Monetization? How Do You Monetize SBLC??

SBLC Monetization or monetisation is the process of converting a standby letter of credit (sblc) into money or legal tender.

Grand City Investment Limited are sblc monetizers. We can arrange and assist clients to monetize their Standby Letter of Credit from rated banks. The Standby Letter of Credit Monetization arrangement issues Non Recourse funds to the Client shortly after the Standby Letter of Credit (SBLC) is delivered to the Monetizer.

Our SBLC monetization rate is 80% LTV which is the best rate in the industry, and above all, all our sblc are issued by top AAA rated banks such as HSBC Hong Kong,  Citi Bank New York, Barclays Bank London, Credit Suisse etc.

Description of a Standby Letter of Credit For buy or Purchase:

1. Instrument:                  Standby Letter of Credit (SBLC), cash-backed,
2. Total Face Value:         Eur/USD 2 Million (Min) to Eur/USD 5B (Max)
3. Issuing Bank:              Citibank New York, HSBC Hong Kong, Barclays Bank London, Deutsch Bank Frankfurt  or any AA Rated Bank.
4. Term / Age:                One (1) Year and One (1) day, Fresh Cut
5. Invoice Price:              45% Net and 47% Gross of the face value of each BG/SBLC to the Seller, including 2% consultancy fees as per IMFPA.

6. Consultation Fee:       In total of 2%, which is to be split and paid to the consultants as follows:

1% to …(Seller’s Mandate).., paid by the Seller/Payer-1

1% to ………………………, paid by the Buyer/Payer-2 7. Delivery of instrument:          Bank-To-Bank by SWIFT MT-760, as per the Schedule of Delivery of Buy-Sell Agreement

8. Payment for instruments:                   By SWIFT MT-103 wire transfer
9. Original Hard Copy:                 By bonded courier to Buyer’s designated Depository Bank within Seven (7) bank working days after receipt of BG/SBLC(s) settlement payment by SWIFT MT-103 into the Seller’s account.

  Description of a Standby Letter of Credit For lease or rent: 

1. Instrument:               Fully Cash Backed Standby Letter of Credit {SBLC}
2. Total Face Value:       USD 2Million (Min) to USD 5B (Max)
3. Issuing Bank:             HSBC Hong Kong, Barclays Bank London or any prime Bank.
4. Age:                        One Year and  One Day (with rolls and extensions where applicable)
5. Leasing Price:            4%  (+ 2% brokers commission where applicable) 2% broker commission applies to clients that were introduced by brokers
6. Delivery:                   SWIFT MT-760
7. Payment:                  MT103  Wire Transfer
8. Hard Copy:                Bonded Courier within 7 banking days.9. Bank Transmission fee: Depends on the face value of the bank instrument

These are the top 7 reasons why many Standby Letter of Credit transactions fail.

1. Free Standby Letter of Credit Without Upfront Fees – Many people are under the false illusion that they can close a Standby Letter of Credit transaction free of charge without spending any money upfront. They want the Standby Letter of Credit provider to pay any upfront fees so that they can complete the sblc transaction for free of charge without spending anything. However, there is no such thing in the world as a free bg sblc, and every customer must have the capacity to pay any fees or costs associated with the bg sblc transaction, if you don’t pay this fee nobody will pay it for you. This is the number one reason why many SBLC transactions fail. If free bg sblc is possible I believe that everyone in the world will be a billionaire.

2. Customers Procedure: Every week we receive Standby Letter of Credit inquiries from people who say they want SBLC to be issued according to their own terms and conditions. Obviously this is not POSSIBLE; Banks and sblc providers do not work according to a customers terms. If you need SBLC or any financial instrument for that matter then you have to follow the bank or sblc providers laid down rules and procedures. This is the second reason why many sblc deals fail.

3. Cheap Price:  Greedy people are easily lured by fake artificially low Standby Letter of Credit prices offered by scammers. The simple truth is, when a scammer is not delivering anything real they can afford to offer you the deal of the century. So when it sounds too good to be true then be careful. Price Shopping is the third reason why sblc transactions fail.

4. Greedy Million Billion Gang: Offers that set forth tranches of $5b, $20b and more, are just pure nonsense. Every week we receive offers from people who claim they need Billion Dollar SBLC or more. Truth is that most people who troll the internet with multi billion dollar SBLC requests do not have any money in their bank account to close the deal. Greed and Ignorance will make you lose your sense of reasoning. Many people don’t want to hear these things because truth hurts but we will keep saying the truth regardless.

5. Bank Endorsed Deed of Agreement (DOA): Banks do not endorse SBLC deed of agreement contracts or LOI. This action would place a financial liability on the bank and they cannot and will not incur that liability on behalf of their depositors. So if you received any offer or document from anyone claiming it has been endorsed by the bank kindly run for your life because it is FAKE.

6.  BPU (Bank Payment Undertaken): Banks do not issue BPU to enable a customer to get a financial instrument without paying upfront fee. This is just joker-broker and uninformed customer nonsense. You don’t believe me? Well contact your banker and ask questions. I am a seasoned banker that has worked with some of the world’s biggest banks so I know.

7. ICBPO MYTH: ICBPO means Irrevocable Conditional Bank Pay Order. Banks do not issue irrevocable conditional bank purchase orders (ICBPO), or any purchase orders, period. Many joker brokers and uninformed clients think they can close a deal with ICBPO. In fact, a bank is precluded from incurring any liability on behalf of a depositor. And, the words “irrevocable conditional” form an oxymoron. No western world bank will issue a MT543, as it is a liability on behalf of the bank. In fact, as of September 1, 2003, the MT543 is gone from the banking world. This is just joker-broker and uninformed customer nonsense. You don’t believe me? Well contact your banker and ask questions.

Standby Letter of Credit Provider – Grand City Investment Limited

Standby Letter of Credit Process – How To obtain a Standby Letter of Credit (SBLC)

If you are in the market to obtain a standby letter of credit, then read this article about how to get genuine standby letter of credit from rated banks in France, Germany, Switzerland, USA, UK or Dubai.

Dear ladies and gentlemen,
We, the Ravens Power AG are pleased to submit this letter with the intent to declare our firm interest to lease a Standby letter of credit (SBLC), through Your sources, as follows:

I. The purpose of the SBLC. The SBLC will be used as a partial collateral for an already approved and signed line of credit. The credit line has a term of 15 years and the SBLC will be exchanged upon expiry – within 11 months, against mortgage for the Real Estate property, that will be acquired by our company, during the first year of the credit term.

II. Subject Stand by letter of credit in the amount of €100,000.000,00 ( Euros one hundred million ) for the term of one year and one day as per conditions stated below and provided SWIFT Verbiages –