Standby Letter of Credit (SBLC)

Standby Letter of Credit (SBLC)

What is Standby Letter of Credit (SBLC)

Standby Letter of Credit (SBLC) is a guarantee of payment issued by a bank on behalf of a client that is used as “payment of last resort” should the client fail to fulfill a contractual commitment with a third party. The Standby letter of credit is never intended to be utilized, however, it keeps contracts from going unfulfilled in the occasion your organization shuts down, declares bankruptcy, or can’t pay for products or services given. It helps prove a business’s credit value and repayment abilities.

Very much like Bank Guarantee, a Standby Letter of Credit can be used by Buyer as collateral to secure a Loan or Credit Facility or to make purchases in foreign business transactions. SBLCs are very flexible instruments for all types of business.  It can cover anything from an ordinary guarantee commitment to a more sophisticated financial instrument.

Standby Letter of Credit (SBLC) Used In Foreign Trade Transactions - Grand City Investment Limited

Example of Standby Letter of Credit (SBLC):

Lam Tang Limited, a Chinese exporter, received an order to supply goods to Johnson Ltd., a British company.  Lam Tang Limited wants an assurance from Johnson Ltd. that it will make timely payment for the goods. Obliging to the request of  Lam Tang Limited, Johnson Ltd. issued a Standby Letter of Credit in favor of Lam Tang Limited. In this case, if due to any circumstances Johnson Ltd. fails to make the payment to  Lam Tang Limited, the Chinese company can claim the credit on the Standby Letter of Credit. Thus, the Standby Letter of Credit acts as an assurance to the exporter that he will be paid for the export of goods.

Standby Letter of Credit (SBLC) Providers – Who Are They?

Standby Letter of Credit (SBLC) Providers are banks or other financial services providers like Grand City Investment Limited that issue Standby Letters of Credit (SBLC MT760) and other bank instruments from rated banks on behalf of its customers.  The customers and beneficiaries of Standby Letter of Credit (SBLC) can use the Standby Letter of Credit (SBLC) to obtain loans from banks, for import and export, credit enhancement facility as well as for trading and to secure contracts.

Grand City Investment Limited is the leading Standby Letter of Credit (SBLC MT760) Provider in the world. We are Licensed Money Lenders that were incorporated in Hong Kong on MAY 29, 1984 with Company Registration No. 0137353 under  the   Money Lenders  Ordinance (Chapter  163  of  the laws of Hong Kong). We are the premier providers of Trade Finance, Recourse Loan, Non Recourse Loans, Insurance, Investments, Wealth Management, Portfolio Management, Trade Platforms, Private Placement Programs as well as the issuance and monetization of Bank Instruments such as Standby Letter of Credit (SBLC), Bank Guarantees (BG), Usance LC, Letters of Credit, Differed Letters of Credit and Funding for companies, SME’s and private individuals.

Being the direct SBLC Providers, Grand City Investment Limited can support imports and exports by providing standby Letter of Credit – SBLC MT760 on behalf of the importer and in favor of the exporter to conclude their trade deals.

Characteristics of Standby Letter of Credit (SBLC) Providers

1. A Genuine Standby Letter of Credit (SBLC) Provider Must be legally registered to provide financial services such as issuance and monetization of bank instruments like bank guarantees, letters of credit, SBLC, DLC etc.
2. A Standby Letter of Credit (SBLC) Provider must have a Licence to provide financial services such as BG/SBLC issuance and monetization. For example, Grand City Investment Limited is a Licensed Money Lender that was incorporated in Hong Kong on MAY 29, 1984 with Company Registration No. 0137353 under  the  Money Lenders  Ordinance  (Chapter  163  of  the laws of Hong Kong). Our Money Lender’s Licence No. is 1589/2019


A business can be successful if it has the necessary capital. If you have a good business idea and the obstacle is lack of funds, we are there to fulfill your dream of a successful business. We provide financial instruments, BG and SBLC from leading financial institutions in the USA, United Kingdom, France, Germany, Singapore, Canada, Hong Kong or Switzerland such as HSBC, JPMorgan Chase, Barclays Bank, bank of America, WellsFargo Bank, UniCredit and many other prime banks around the world. They are the most recognized Lease BG/SBLC Providers (Bank Guarantee and Standby Letter of Credit). With our financial services, your business can run smoothly and any hindrance can be tackled immediately. If you are in need of a financial instrument, especially a bank guarantee or a standby letter of credit, make sure that it is issued by prime rated banks in Western Europe or USA because bank instruments from non rated banks are

Bank Instruments Format Available @ Grand City Investment Limited

ICC Uniform Customs and Practice for Documentary Credits (UCP600).

International Standby Practices (ISP98).

ICC Uniform Rules for Demand Guarantees (URDG 758).

Financial Services Provided By Grand City Investment Limited

SBLC – Standby Letter of Credit
BG – Bank Guarantee
Bank Instrument – BG SBLC Monetization

LC – Letter of Credit

DLC – Documentary Letter of Credi

SWIFT MT 799 MT 760 Bank Guarantee/SBLC

POF – Proof of Funds



This is one of the highest and most secure payment guarantees available.  All parties are protected particularly when the bank is involved during completing a transaction presented by sblc provider. Obtaining SBLC financing is the best way to create a guarantee of funds, even if the person who is promising to pay doesn’t come through with the appropriate funds.

As a back-up option The primary use of standby letters of credit created by SBLC Providers is to serve as a back-up option that is only used if the buyer fails to pay. However, it does require some form of collateral or line of credit to back up the letter. Bank that offers credit lines involved in the transaction to ensure greater assurance of payment, especially for larger transactions.



We provide one of the most secure processes in funding guarantees in the business so you can complete your Bank Guarantee funding with us with confidence and safety. Our provider bank confirms that they are the sblc providers with sufficient funds on our account to fully settle your transaction. The sblc provider Bank Reserves funds solely for settlement of your transaction. Our provider funding bank issues the MT799 payment guarantee with full banking responsibility and liability. This means if the provider defaults on completing the payment for our SBLC for any reason. Then the provider bank will complete the payment and is standing behind the MT799 payment guarantee with the bank’s full responsibility and liability.

Did your bank reject your SBLC application?
Whether you need the SBLC for import/export, obtain a loan or secure a contract, Grand City Investment Limited can help you. Click here to begin the SBLC application process.

Without sufficient funds, the business cannot implement its ideas practically and growth opportunities. In such situations, sellers and lenders play a significant role. If you are an upcoming entrepreneur, dreaming of starting a business, you can borrow money from financial institutions or monetize your bank financial instruments like bank guarantees and standby letters of credit. The amount of financial assistance depends upon your repayment capability and credit score.

Types of Standby Letters of Credit (SBLC)

Understanding the types of standby letters of credit such as performance, advance payment, bid bond, counter, financial, insurance and commercial standby letters of credit.

Definition: As explained at the beginning of this post, a standby letter of credit is a bank’s undertaking of fulfilling the applicant’s obligations.

A standby letter of credit is issued as a collateral and is therefore not intended to be used as a primary payment method unlike a commercial letter of credit.

Standby letters of credit will be liquefied only if the applicant defaults on its responsibilities under the underlying contract.

Standby letters of credit can be seen as a mixture of “commercial letters of credit” and “demand guarantees”. Standby letters of credit have the same structure as the commercial letters of credit, whereas their role is almost identical to the demand guarantees.

Structure: According to ISP 98, International Standby Practices, “A standby is an irrevocable, independent, documentary, and binding undertaking when issued and need not so state.”.

These are also the main characteristics of the commercial letters of credit.

Usage: The role of a standby letter of credit is that the issuer will “stand by” to perform in the event of the account party’s non-performance or default.


Types of Standby Letters of Credit (SBLC):


  • A “Performance Standby” supports an obligation to perform other than to pay money, including for the purpose of covering losses arising from a default of the applicant in completion of the underlying transactions.
  • An “Advance Payment Standby” supports an obligation to account for an advance payment made by the beneficiary to the applicant.
  • A “Bid Bond/Tender Bond Standby” supports an obligation of the applicant to execute a contract if the applicant is awarded a bid.
  • A “Counter Standby” supports the issuance of a separate standby or other undertaking by the beneficiary of the counter standby.
  • A “Financial Standby” supports an obligation to pay money, including any instrument evidencing an obligation to repay borrowed money.
  • A “Direct Pay” Standby supports payment when due of an underlying payment obligation typically in connection with a financial standby without regard to a default.
  • An “Insurance Standby” supports an insurance or reinsurance obligation of the applicant.
  • A “Commercial Standby” supports the obligations of an applicant to pay for goods or services in the event of non-payment by other methods.

Sources: ISP 98 preface.

The Importance of Standby Letter of Credit (SBLC) .

Standby letters of credit are often used in international trade transactions, such as the purchase of goods from another country. The seller will ask for a standby letter of credit.

A standby letter of credit shows a company’s credit quality and ability to repay loans. Although SBLC/BG is not intended for use as a replacement for immediate cash payment obligation, it helps fulfill business obligations in case the business stops operations, cannot pay its vendors or becomes insolvent.
Small businesses often face difficulty when securing financing. For this reason, Standby Letters of Credit may be especially beneficial for encouraging investors to lend money to such a company. In case of default, investors are assured they will be paid the principal and interest from the bank through which the SBLC/BG is secured.

Standby Letters of Credit are issued for use in a wide variety of commercial and financial operations. Standby Letters of Credit are very much alike Documentary Letters of Credit (DLC). Their main difference is that unlike DLCs, SBLCs only become operative in case the applicant defaults. In case of default, the beneficiary in whose favor the SBLC was issued, can draw on the SBLC and demand payment.

Historically, Standby Letters of Credit were developed because the US regulator legally limited the US bank’s authority to issue Bank Guarantees.
SBLCs are also very similar to Bank Guarantees (BG), which too require that the presentation of stipulated documents be compliant with the terms and conditions of the Bank Guarantee. Standby Letter of Credit (SBLC) and Bank Guarantees are different in terms of protection, they both serve the primary purpose of making sure that sellers get paid, but while a Standby Letter of Credit protects the seller, a Bank Guarantee (BG) protects both sides, since it also protects the buyer in case the supplier never ships the goods or ships them in a damaged condition.


Security Provided By SBLC


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.

Standby Letter of Credit (SBLC) Description:

1. Instrument:                Fully Cash Backed StandBy Letter of Credit {SBLC} (ICC 458/758 format)

2. Total Face Value:       Eur/USD 1Million (Min) to Eur/USD 50 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  Wire Transfer
8. Hard Copy:                Bonded Courier within 7 banking days.

SBLC COST- How Much Does It Cost To Obtain a Standby Letter of Credit (SBLC)?

SBLC costs include account opening fee, processing fee, leasing fee and bank transmission fee. Generally speaking, the cost to obtain a standby letter of credit varies from bank to bank and from company to company. Some banks charge up to 10% of the SBLC face amount annually, but our company (Grand City Investment Limited) charges only 4% of the SBLC face value and the SBLC can be canceled as soon as the terms of the contract have been met by the buyer or lessee. That’s one of the advantages of working with genuine SBLC providers like Grand City Investment Limited.

Standby Letter of Credit (SBLC) Providers



























Contact us today to see how a Standby Letter of Credit from rated banks can help you conclude worthy deals with your suppliers and contractors.

SKYPE: dr.williams09787

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