A SBLC or Standby Letter of Credit is a method of asset enhancement used to increase a client's investment potential.
A Standby Letter of Credit can be used internationally or nationally to support business transactions in numerous ways, which allows businesses to reach their investment project goals swiftly, securely and simply.
A SBLC is just a type of Bank Instrument that is issued to non profit organizations, individuals, trust, endowments, corporations, pension funds or to any entity that is payable.
The SBLC allows a client to accomplish their goals by substituting the credit of the bank for that of the client, for the purpose of facilitating business or trade.
There are basically two types: standby and commercial. The latter is the primary payment mechanism for a transaction, whereas the SBLC is a secondary payment mechanism.
Some of the uses of a Standby Letter of Credit (SBLC) include:
- Lessen common international trading risks
- Ease the establishment of new business relationships between companies and individuals
- Optimize cash flow by freeing up company capital which might otherwise be locked up as deposits
- Maintain capital for company business expenses
- Expedite trade and transactions both domestically and internationally
- Support the payment of financial agreement and/or obligations
- Help maintain investment plans
- Since the SBLC is normally less costly than other modes of guarantee and are simpler and faster, it reduces expenses
Normally, these instruments are issued from HSBC London, Barclays bank and DEUTSCHE BANK London and Germany.
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