Standby Letter of Credit for Project Finance

Facilitating the capital raising process.

A Standby Letter of Credit (SLOC) can be a powerful tool in project finance, especially before project bonds are issued.

Here's how an SLOC can add additional security and facilitate your project's financial needs:

1. Enhancing Creditworthiness: An SLOC provides assurance to lenders and investors, reducing perceived risk and improving the project's credit profile. This often results in better financing terms, such as lower interest rates and longer repayment periods.
2. Supporting Initial Financing: Before long-term project bonds are issued, your project might require short-term financing. An SLOC can act as a guarantee for these short-term loans, ensuring lenders are repaid even if initial cash flow issues arise. It also reassures early-stage investors about the security of their funds.
3. Securing Contractor and Supplier Agreements: Contractors and suppliers may demand guarantees before entering into agreements. An SLOC can serve as a performance guarantee, ensuring they are paid even if the project faces financial difficulties. It can also guarantee advance payments, ensuring these are returned if contractual obligations are not met.
4. Supporting Bond Issuance: An SLOC enhances investor confidence when project bonds are eventually issued. It can provide temporary security during the period between project start and bond issuance, maintaining financial stability.
5. Regulatory and Compliance Support: Some projects require additional financial guarantees to meet regulatory requirements. An SLOC can fulfill these needs, allowing the project to proceed without regulatory delays. It also helps ensure compliance with financial covenants stipulated by lenders.

At Financely, we can help you obtain SLOCs from China Construction Bank for qualifying projects. Find the issuing fees here.

Let us help you secure the financial stability your project needs to succeed.