Bank Guarantee and Standby Letter of Credit
Bank Guarantee (BG) and Standby letter of credit (SBLC) Introduction
A Standby Letter of Credit is often used to provide security for an obligation, such as a lease or other long-term contract. Landlords may require a deposit or a standby letter of credit that guarantees payment from the issuing bank if a tenant falls in arrears. Often, large contracts may require at least one of the parties to have a standby letter of credit in place for the transaction to move forward. Basically, a standby letter of credit guarantees the beneficiary that it will be paid from a creditworthy bank if it’s unable to get paid by its counterparty in a transaction.
Express provides standby letters of credit, allowing transactions to happen that otherwise might be considered too risky by the receiving entity.
IMPORTANT: Standby Letters of Credit (SBLC) are normally forms of payment security or payment guarantee between a Buyer and Seller of Goods. Therefore the Standby Letter of Credit (SBLC) we provide clients are NOT MONETIZABLE and are NOT TRANSFERABLE like a Bank Guarantee (BG) would be. A Standby Letter of Credit (SBLC) is a specialist payment mechanism that is used for a specific buy and sell goods transaction, a SBLC cannot be monetized by a 3rd party.
Bank Guarantee (BG)/ Standby Letter of Credit (SBLC) Benefits
A standby letter of credit minimizes risk, maximizes control, and optimizes profits associated with international trade by making transactions simpler, smoother and safer for all sides.
• You may not have the necessary collateral requirements or relationship with the bank to get a letter of credit—but we do.
• You don’t have to leave deposits with your suppliers, since your letter of credit will be opened for the full amount of the transaction—so your cash is not tied up or at risk while your supplier can often borrow against a letter of credit.
• You may significantly increase your ability to do business with companies outside the U.S. by bolstering your financial position with your suppliers.
• You can build safeguards into the letter of credit, including inspection of the goods and quality control, and set production and delivery times. This gives you more quality control over your goods.
• Payment is assured as long as you comply with the terms and conditions of the letter of credit.
• The credit risk is transferred from the buyer to the issuing bank, which is obligated to pay even if the buyer goes bankrupt.
• You have easier access to financing and are able to transfer all or part of the letter of credit to another party, e.g., to purchase raw materials.
• Collection time is minimized, as the letter of credit accelerates payment of receivables, and foreign exchange risk is eliminated when it is issued in the currency of your country.
Standby Letter of Credit Procedure
Being a direct provider, we can support your imports and exports by providing Standby Letter of Credit – SBLC – MT760 on behalf of importer and in favor of the exporter to conclude your trade deals.
Below is the quick procedure to get Standby LC from AURA LIMITED:
At first, importer / purchaser will submit their SBLC request to AURA LIMITED. They should provide buy and sell agreement or pro-forma offer of their trade deal accordingly.
AURA LIMITED will review the commercial transaction between Purchaser and seller. After careful study then will inform the Purchaser about our consent or refusal of their MT760 request.
After the MT 760 request acceptance, we will draft a service agreement between client and us consequently. Thus, the client will be informed about the admin charges to start work on their Standby LC transaction.
Then the Purchaser will provide required documents and pay the MT 760 issuance fee charges.
AURA LIMITED will act instantly and provide Standby LC from their bank account with Bank. This MT 760 will be on behalf of Purchaser and in favor of their seller to conclude their trade deal.
Flow Diagram for BG/SBLC Document
7 Reasons to choice AURA LIMITED to deliver Standby Letter of Credit (SBLC) for you:
1. Required limited deposit or no deposit - No deposit or any form of guarantee required upon approved by
basic requirement check.
2. No background check on payment capability
3. 72 Hour Delivery - We normally deliver Standby Letters of Credit (SBLC) within 72 hours of all documentation and payments being completed.
4. Any Country - We will issue Standby Letters of Credit (SBLC) for the import/export of goods from ANY country.
5. Any Currency - We will issue Standby Letters of Credit (SBLC) in almost any currency.
6. Lower Fees - Our fees for issuing Standby Letters of Credit (SBLC) are more cost effective than many larger public banks.
7. Less Restrictive - Our required control clauses for a Standby Letter of Credit (SBLC) are much easier than other banks.
We use the Bank SWIFT Network to have the clients Standby Letters of Credit (SBLC) delivered Bank to Bank. We operate a reliable, efficient delivery and authentication process to ensure all Standby Letters of Credit (SBLC) are successfully delivered for our clients.