What Is A Standby Letter Of Credit And How To Get It?

The Standby Letter of Credit is like a bank guarantee provided to an international trader so that they could any type of risky situation where the chances of loss can be high or disastrous for the trader.

In this guarantee, the bank will be playing a mediator like the part where if the buyer is unable to fulfill the contract as written the bank will pay the behalf of the importer.

The stand by letter has saved many businesses and with this letter, you can show your business partners that you have the trust of the bank, so that they can have business with you without issues and grow your business to new heights.       

There are several types of letters of credit,

•    The domestic ones are opened in favor of a beneficiary who is domiciled in the same country, therefore, in this case, there is no corresponding bank figure.
•    The transferable, allow two or more beneficiaries to participate in the credit and are only transferable on one occasion. Generally, they are used by intermediaries in international trade such as commission agents, brokers, or consolidators.
•    The Stand-by, is used with the purpose of supporting the payment of monetary obligations on an agreed date. This type of letter is a guarantee instrument that is issued so that it is not used by the beneficiary.

Letter of Credit Route
The seller is the one who requests the letter of credit from the buyer for security since through it an irrevocable commitment is established that cannot be canceled (terminated), but with the express consent of the beneficiary/seller. The buyer requests the establishment of a line of credit to the issuing bank, which in turn, establishes a correlational contract with the confirming/advising bank in the seller's city. The issuing bank issues the letter of credit and sends SWIFT (World Society for Interbank Financial Telecommunication) messages to the confirming bank, the seller receives the letter of credit and must verify that it corresponds to what was agreed with the buyer.

Once the goods are delivered, the seller must present the documents verifying the shipment to the confirming bank, if the documents are in order, the bank pays at sight or agrees to pay at a future date. The confirming bank sends the documents to the issuing bank and the issuing bank, in turn, delivers the documents to the buyer.

The process of getting an SBLC:

Request
Complete and submit to the ITF a Standby Letter of Credit (SBLC) application using our online application.

Eraser
The ITF creates the individualized SBLC. The client confirms and signs the final version.

Due diligence
The ITF client compiles various requested documents related to his company. ITF analyzes these documents to ensure that the agreement complies with all international regulations.

Issue
ITF issues its client's SBLC through the agreed issuer. ITF monitors the SBLC carefully to ensure that it reaches the beneficiary.

Once you have completed this process your application will be fulfilled and you will get your Standby Letter of Credit without any wait.