Some of your Questions:

Q. Can you meet us in person?

Yes, if you have filled in our application, we can arrange a face-to-face meeting in our Bangkok office.

Q. What is a Standby Letter of Credit (SBLC/SLOC)?

A Standby Letter of Credit (SBLC/SLOC) is a guarantee that is issued by a bank on behalf of a client. It ensures that payment(s) will be made even if the client finds themselves in a position where they are unable to do so.

Q. What industry contracts can a SBLC support?

SBLC undertakings can support any type of underlying contract, agreement or obligation between an issuer’s client or applicant and the applicant’s client/counterparty – the beneficiary – provided that the issuer is willing to support the nature of the underlying contract.

Q. What fees are charged for a Standby Letter of Credit?

It is standard for a fee to be between 2-10% of the SBLC value. If the business meets the contractual obligations prior to the due date, it is possible for a SBLC to be ended without any further charges.

Q. Can SBLC be used as collateral?

Similar to a Bank Guarantee, a Standby Letter of Credit can be used as collateral to secure a Loan or Credit Facility and can also be used to make purchases for foreign business transactions.

Q. Is a Standby Letter of Credit a financial guarantee?

SBLC’s were first introduced in the United States and are similar to a Bank Guarantee as it protects the buyer in case of default by covering their liabilities. It works on the principal of ‘Uberrima fides’, a Latin phrase meaning in ‘utmost good faith’.

Q. What can you do with a SBLC?

A Standby Letter of Credit is frequently used in both domestic and international transactions where parties to a contract do not know each other. It serves as a safety net by assuring the seller that the bank will make payment(s) for goods or services delivered if the buyer fails to make payment on time.

Q. What is a Letter of Credit?

A Letter of Credit is a legal written document issued by the importer/buyer’s bank in favor of the exporter/seller to assure that the seller will be paid on time by the buyer for all goods and services provided.

In the event that the buyer defaults on the Terms & Conditions of the contract and/or paying agreed amount(s) in an ingoing trade transaction, the issuing bank will make the payment to the exporter.

Q. What can you do with a Letter of Credit?

A Letter of Credit is used to minimize risk in international trade transactions where the buyer and seller may not know each other. For example, an importer can ensure they only pay for goods once they have been provided with evidence of shipment.

Q. What is cash-backed SBLC?

A cash-backed Standby Letter of Credit minimizes risk and optimizes profit, while also maximizing control when an individual or association enters into business in an international market.

Q. Can a Letter of Credit also be discounted like an invoice?

Yes, if it is a Transferable Letter of Credit, it can be used to provide the beneficiary with a discounted value once the terms of the letter have been fulfilled.

Q. Can a SBLC be used to support an issuer’s needs?

Yes and as noted in UCP 600, ISP98 (and URDG 758), when permitted by the applicable law. In these cases, the issuer becomes the applicant, as well as the issuer. This is commonly known as a two-party SBLC.

Q. Is a Letter of Credit and a Bank Guarantee the same?

A Letter of Credit is a legal guarantee from a Bank or Financial Institution that payments will be made on time in the event that Terms & Conditions are not met.

A Bank Guarantee ensures a sum of money is paid to the beneficiary. The bank will only do this if the contractual obligations are not met.

Q. Is a Letter of Credit a safe option?

A Letter of Credit is a safe, reliable and trustworthy trade finance instrument for both buyers and sellers. Should the buyer default, the bank pays the seller, while the buyer releases payment to the seller only after the Terms & Conditions have been fulfilled.

Q. What are the differences between a Letter of Credit and a Standby Letter of Credit?

The main differences between a Letter of Credit and a Standby Letter of Credit are, as follows:

A Letter of Credit acts as a primary method of payment, whereas a Standby Letter of Credit only comes into action if there is a default in payment.

A Letter of Credit is relayed via authenticated SWIFT MT700, while a Standby Letter of Credit is issued using SWIFT MT760.