Letters of Credit are occasionally necessary for businesses in order to give certainty over a future payment. These documents, which generally fall into two broad categories – Standby Letters of Credit (SBLC) and Documentary Letters of Credit (DLC) – are offered by banks as positive evidence of their client’s credit profile.
At Sea Trade Financial we are able to arrange letters of credit on your behalf, ensuring your business and your suppliers are able to build the trust necessary trade efficiently and with the fewest possible delays.
STANDBY LETTERS OF CREDIT
SBLCs differ from DLCs in that they are never intended to be used as a means of payment for the fulfilment of a contract.
An SBLC is a guarantee from your bank that should you be in a position where you’re unable to meet the financial obligation you enter into, it will stand good for the fulfilment of the contract.
A Standby letter of credit is a secondary mechanism for improving payment or credit. A financial institution may issue a SBLC to a client to assure the receiver of the documentary credit instrument its ability to pay in terms of the terms of payment of a contract between the beneficiary and the customer for which the bank issues the SBLC. Documentary Letters of Credit are used in International Trade Finance to assist your Company’s Cash Flow situation. Generally, letters of credit are usually classified into one of two classifications:
At Sea Trade Financial we’ve developed the structure, systems and strong cash position necessary to monetize SBLCs, Bank Guarantees and other financial instruments of ownership through partnerships with our trusted banks – allowing our clients to raise the finance needed for project investment.
We can offer the best possible options for SBLCs that need to be managed over 12 months or more.
DOCUMENTARY LETTERS OF CREDIT
Broadly speaking, Documentary Letters of Credit are a guarantee of contractual fulfilment by the issuer and are generally used for import and export and to conduct business between companies from different countries.
In the vast majority of cases, the financial terms of the DLC would only be fulfilled once the obligations specified in the contract between the trading parties had been met.
We offer a range of DLC options with letters covering periods of 90, 120 and 180 days.
If you’d like to find out more about Letters of Credit, we’d love to talk to you about how we can help you to build your credit profile and establish trust with your trading partners.