Any business or any person can find transaction havocs and issues and it is always wise to keep a backup plan. SBLC or Standby Letter of Credit is one of the best options you can use as a backup plan or that can provide you protection whether you are purchasing for a completed service or you are shipping any physical good.
What is SBLC?
Standby Letter of Credit is the key to protection; it is basically a letter issues by your bank which say it will pay a “beneficiary” in case you are unable to pay or something fails to happen. The bank pays the beneficiary for you if you fail to complete the project, pay on time or unable to stand up to a few terms and conditions. The standby Letter of Credit is the letter where the bank promises you the same.
Standby Letter of Credit is a great service to use as it can benefit you many ways. One of them is International Trade. However, it can also be proved beneficial in terms of domestic transactions.
How does it help you in International Trade?
As the bank is guarantying you to pay the beneficiary for you in terms of emergency, they make one thing the main purpose of their service and that is to boost you or your business’ creditworthiness.
When you are able to pay make the payments on time, then there is no way the letter of credits get drawn on. In the international market, the Standby Letter of Credit works as backup plan for you. When you are dealing in the international market, the buyers benefit from the goods and services they get in lower costs and the sellers benefit from the added demand. Here, Standby Letter of Credits plays the role of backup payment mechanism.
Banks that provide Standby Letter of Credit are likely to get more customers as they provide you amazing international trading opportunities.
How to get an SBLC?
You can simply ask your bank or your finance company to provide you one. But make sure you understand all the terms and conditions first; then you proceed further with everything.
Or better still you should contact us if your bank cannot help you.