Financial Standby Letter of Credit

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Standby Letter of Credit (SBLC), a Savior for
Small Businesses
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• Forget the days when you had to request investors
  for investing in your company to counter the
  finance-related problems.
• Standby Letter of Credit (SBLC) provides you
  great support if you are a small business and in
  initial stages.
• SBLC is a powerful financing tool, and you can
  use in tight situations when you are running out
  of money, and the situations are not favorable
  for business.

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• The Standby Letter of Credit is also taken as a
  sign of trust in business transactions, and it
  serves as the irrevocable guarantee of payment.
• Nowadays Standby Letter of Credit is issued
  globally with the help of top banks of the
  world. 
• It can be used for a variety of projects and is
  helpful in credit enhancement, trade finance,
  project finance and many more.

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• Standby Letter of Credit (SBLC) is like a
  guarantee of payment issued by the bank on behalf
  of a client. If a client fails to fulfill a
  contract commitment, the bank pays the payment,
  and then client repays the bank.
• Obtaining a SBLC Standby Letter of Credit is an
  easy process, the process is similar to taking a
  commercial loan, but there is much less
  paperwork, and SBLC is issued in less time as
  compared to a loan.
• The business owner has to prove that he/she is
  capable of repaying them, and can show collateral
  if required.

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Types of Standby Letter of Credit
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1.    Financial Standby Letter of Credit

• A financial Letter of Credit is a legal document
  that gives assurance that payment will be made
  under any circumstances, to the seller.
• Financial Standby Letter of Credit is irrevocable
  undertakings by a bank.  Bank guarantees the
  beneficiary the repayment of purchasers
  financial obligations.

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• All financial letters of credits have 100
  conversion factor any outstanding debts are paid
  in full.
• Companies which are trading in securities market
  are required to have guarantees in case they are
  unable to settle their trades.

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2.    Performance Letter of Credit

• There LOC are irrevocable undertakings that bank
  makes to the beneficiary, these are virtually
  same as cash and are revoked in the case of
  court-proven fraud.
• The bank makes a statement that they will make a
  payment if the purchaser does not meet their
  non-financial contract obligations.

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• These are transaction-related contingencies and
  are converted at 50 of total transaction amount.
  
• These are issued to developers to guarantee a
  contractors fulfillment of the contract.
• As you read the Standby Letter of Credit is a
  must-have tool if you are running a business you
  can check various online platforms available to
  check the acceptability of loan at different
  places.

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• Taking professional advice is also a good idea as
  you get the right guidance and companies like The
  Hanson Group of Company have collaboration with
  top Banks of the world to make business
  accessible across the globe.

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