How To Apply for A Standby Letter of Credit
Documentation Requirements
The application process for an SBLC requires meticulous preparation of specific documents to ensure compliance and facilitate approval. Key documents include:
- Application Form: Complete the bank's SBLC application, detailing the transaction and beneficiary information.
- Business Financial Statements: Provide recent financial statements, including balance sheets and income statements, to demonstrate financial health.
- Trade Contract or Agreement: Submit a copy of the trade agreement or contract necessitating the SBLC, highlighting terms and obligations.
- Creditworthiness Evidence: Banks may require evidence of creditworthiness, such as credit reports or references from other financial institutions.
- Collateral Documentation: If collateral is required, provide documentation such as property deeds, stock certificates, or other asset valuations.
Collateral Requirements
Collateral is often necessary to secure an SBLC, especially if the applicant lacks sufficient capital or has a limited credit history. Acceptable collateral types typically include:
- Cash deposits or savings accounts
- Marketable securities (stocks, bonds)
- Real estate properties
- Other liquid assets deemed acceptable by the issuing bank
- Off-take agreements with creditworthy corporations
The value of the collateral must usually exceed the SBLC amount, with banks setting specific loan-to-value (LTV) ratios.
Raising Capital for Collateral
If the required collateral exceeds current capital holdings, businesses must consider raising additional funds. Options include:
- Debt Financing: Secure a loan or issue bonds, leveraging the company's creditworthiness and future cash flows.
- Equity Financing: Raise capital by selling company shares, diluting ownership but not incurring debt.
- Asset Liquidation: Convert non-essential assets into cash to meet collateral requirements without taking on new liabilities.
Alternatives to SBLC
For businesses seeking flexibility or those unable to meet SBLC requirements, alternatives like revolving credit facilities offer a solution.
These facilities provide a pre-approved credit limit, allowing companies to draw funds as needed, repay, and reuse within the agreement period.
This option offers liquidity without the need for a transaction-specific guarantee.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
All submissions are
promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.
Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
Trade Finance
Tap into solutions like letters of credit, bank guarantees, and payment facilitation. We address the challenge of global transaction risk through structured strategies that foster cross-border growth. Complete the form to unlock streamlined funding aligned with your commercial objectives.
Submit a RequestProject Finance
Access non-recourse funding for infrastructure, renewable energy, or other capital-intensive ventures. We mitigate capital constraints by isolating project assets and focusing on risk management. Provide your details to receive a structure that drives growth and maximizes returns.
Submit a RequestAcquisitions
Secure financing for business or real estate acquisitions. We ease transaction hurdles by reviewing cash flow, synergy opportunities, and exit plans. Complete the form for a customized proposal that supports your strategic investment objectives.
Submit a RequestFor Banks
Financely assists banks facing Basel III pressures by distributing trade finance deals and providing collateral for letters of credit. We reduce capital burdens while preserving client relationships and fostering service expansion. Submit your request to optimize your trade finance offerings.
Submit a RequestOnce we receive your submission, our team will review your information to determine feasibility. If eligible, you will receive a proposal or term sheet within 1–3 business days. Visit our FAQ and Procedure pages for more information.
Disclaimer: Financely provides financing based on due diligence and feasibility. Approval is not guaranteed, and past performance does not predict future outcomes. All terms are subject to review. Financely primarily assists with structuring and distribution. Qualified parties carry out the project if the client approves the proposal.
