Letters of Credit: What Are The Different Types?
In the trade finance market, there are really only two basic forms of letters of credit: The Standby Letter of Credit (SBLC) and Documentary Letter of Credit (DLC). Revocable or Irrevocable Documentary Letters of Credit Documentary Letters of Credit (DLC) can be issued as either revocable or irrevocable. Most all Documentary Letters of Credit are issued as an irrevocable DLC as revocable DLCs are very rare. Revocable Documentary Letters of Credit Revocable Documentary Letter
Do You Really Need A Bank Guarantee?
Many times, in a contract or agreement, there is a need for a third party (often a bank) to guarantee to pay a specific amount of money to one party if the counterparty defaults. By receiving a Bank Guarantee (BG), the guarantee transfers the creditworthiness of the applicant of the guarantee to the guarantor (the bank). When a bank issues a Bank Guarantee, it agrees only to pay the specific amount in the guarantee to the beneficiary. The bank does not guarantee the completi
You Want Trade Financing, But Don’t Understand What a Standby Letter of Credit (SBLC) Is
The Standby Letter of Credit serves a different function than the commercial letter of credit or Documentary Letter of Credit (DLC). The Documentary Letter of Credit (DLC) is a primary payment instrument for a transaction. The Standby Letter of Credit (SBLC) serves as a secondary payment instrument. So how does it work? A bank will issue a Standby Letter of Credit on behalf of a client to provide assurances of his/her ability to perform under the terms and conditions of a con
Have You Ever Asked…What Is A Letter Of Credit?
In order to facilitate trade, letters of credit achieve their purpose by using the credit of the customer rather than the credit the bank. There are mainly two types of letters of credit: commercial and standby. The commercial letter of credit is often known as a Documentary Letter of Credit (DLC) and is a primary payment instrument for a transaction, whereas the Standby Letter of Credit (SBLC) is a secondary payment instrument. Documentary Letter of Credit (DLC) Used for cen
