sblc bg funding

 Understanding sblc bg funding

SBLC (Standby Letter of Credit) and BG (Bank Guarantee) are both financial instruments issued by banks and financial institutions. These financial instruments are used to obtain loan and financing from banks, they are also used for trade finance,  foreign exchange as well as import and export transactions.

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

A standby letter of credit (SBLC or 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 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.

Types and Examples of Standby Letter of Credit (SBLC/SLOC):

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 required 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.

Advantages of a Standby Letter of Credit (SBLC / SLOC)

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, 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.

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 often times help avoid an upfront payment to the seller.

How to Obtain a Standby Letter of Credit (SBLC / SLOC)
The standby letter of credit process is similar to that of obtaining a commercial loan and business financing, with a few key differences. 

As with any business loan, you will need to provide proof of your creditworthiness to the bank. However, the SBLC / SLOC approval process is much quicker, with letters often being issued within a week of all paperwork being submitted.

Unlike traditional loans, the bank will require a standby of letter of credit fee of between 1-10% of the SBLC/SLOC amount before issuing the letter. This fee is usually charged per year that the letter of credit is in effect. If the terms of the contract are fulfilled early, you can cancel the SLOC without incurring additional charges. Standby letters of credit can help establish trust with your business partners and be a powerful tool to help meet your business goals.

Please note that Standby Letter of Credit (SBLC/SLOC) is different from Letter of Credit (LC).

CLICK HERE TO LEARN MORE ABOUT DIFFERENCE BETWEEN STANDBY LETTER OF CREDIT AND LETTER OF CREDIT.  

 

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WHAT IS BANK GUARANTEE (BG): A bank guarantee acts similarly to a line of credit, except that a line of credit can be drawn upon at will by the bank's client. A bank guarantee is used only if the client does not pay its vendor an agreed-upon amount. U.S. credit institutions are forbidden from assuming guarantee obligations, and therefore most international transactions require a standby letter of credit. 

Examples of Bank Guarantees

There are many different kinds of Bank Guarantee namely:

• A Payment Guarantee assures a seller the purchase price is paid on a set date.
• An Advance Payment Guarantee acts as collateral for reimbursing advance payment from the buyer if the seller does not supply the specified goods per the contract.
• A Performance Bond serves as collateral for the buyer’s costs incurred if services or goods are not provided as agreed in the contract.
• A credit security bond serves as collateral for repaying a loan.

For example, St. Marys hospital is a new hospital that wants to buy $1 million in medical equipment. The equipment vendor requires St. Marys hospital to provide a bank guarantee to cover payments before they ship the equipment to St. Marys hospital. St. Marys hospital requests a guarantee from the lending institution such as Kingrise Finance Limited ( kingrisefinance.com ) keeping its cash accounts.  Kingrise Finance Limited essentially cosigns the purchase contract with the vendor.

The Easiest and Best Way To Obtain a Standby Letter of Credit (SBLC / SLOC) Is To Contact Kingrise Finance Limited. 

 

Kingrise Finance Limited is a direct provider of Standby Letter of Credit (SBLC/SLOC) and Bank Guarantee (BG).. We also provide Business Loans, SME Loans, Project Financing, recourse Loans, Non Recourse Loans, Letter of Credit, Standby Letter of Credit Funding, Lease Bank Guarantee, Performance Guarantee Bond, Tender Bond Guarantee, Advance Payment Guarantee, Bank Comfort Letter, sblc bg funding, lease sblc, lease bank instruments, sblc bg provider.  

Our bank instruments, bg and sblc/sloc are issued from prime banks such as Barclays Bank London, Standard Chattered Bank, HSBC Hong Kong or any rated AAA bank of your choice. All our financial instruments are Cash-Backed and can be used as collateral to secure funding for projects, Discounting, Monetization and Private Placement Programs (PPP)..

BG/SBLC Description:
1. Bank Instrument Type: Cash Backed Bank Guarantee {BG} / Standby letter of Credit (SBLC)
2. Face Value: USD/EUR 1Million (Minimum) to USD/EUR 50 Billion (Maximum)
3. Issuing Bank: Barclays Bank London, HSBC Hong Kong, Citibank New York, Deutsch Bank Germany or any prime 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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Kindly contact Us today for all your funding needs, including business loan, sme Loans, project financing, Lease bg, Lease sblc, Bank Guarantee Provider

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