Qualities of A Reliable SBLC Provider

February 27, 2020

When you are undertaking a high revenue-generating business transaction in the domestic or international market, you need support from an SBLC providers that can vouch for your creditworthiness. This can be performed in various ways, but the most popular for these days is applying from a letter of credit (LC). LC is the assurance signed by the buyer’s bank ensuring the seller that they will receive the full payment for the goods and services purchased by the buyer.

One of the most famous types of LC is a Standby Letter of Credit (SBLC). This a guarantee that is issued by a bank or any financial institution on behalf of a financial organization called the Society for Worldwide Interbank Financial Telecommunication (SWIFT). Under this assurance the bank or the institute makes full payment for its client if their client is bankrupt or unable to make the payment. There are various types of SBLC including Tender-Bond SBLC, Performance SBLC, Advance-Payment SBLC, Financial SBLC, Insurance SBLC, Counter SBLC, Commercial SBLC, and Direct-Pay SBLC.

Parties Involved in Standby Letter of Credit

The Applicant - The first person when applying for a standby letter of credit (SBLC) is the client or buyer. The buyer contacts their bank and applies for an SBLC. In order to get the SBLC approved the clients need to provide a collateral or provide credit to show its creditworthiness. The client will be required to pay a bank fee at this step.

The Issuing Bank - The next party involved in an SBLC is the applicant’s bank. They will be issuing the SBLC after reviewing the documents and ensuring that the collateral is worth the shipment value.

The Beneficiary - Or seller, in whose favor the SBLC is drawn. The bank will need the delivery deadline and shipment details before finalizing the application.

Confirming Bank - Confirming the bank gets involved only when the buyer has failed to meet the payment deadline or is unable to make the payment at all. The confirming bank is responsible for making the full payment to the seller, not the issuing bank. The seller will have to pay a small bank fee to the Confirming Bank and they will collect the amount paid to the seller from the Issuing Bank.

Advising Bank - Advising Bank represents the seller and accepts the SBLC and payment on behalf of their client either from Confirming Bank. They make sure that their clients are paid in full and have not been cheated. Sometimes the Advising Bank and the Confirming Bank can be one, but it is not compulsory.

Source a reliable provider with these tips provided by our experts.