Standby Letter of Credit

 Underwriting Terms & Procedure

1. Overview

This document outlines Financely’s policy and procedures for advising and underwriting standby letters of credit (SLOC) on behalf of clients. Financely acts strictly as an advisor and arranger—not an issuer. We provide comprehensive deal analysis, underwriting, and structuring support before submitting client requests to qualified liquidity providers. Additionally, Financely facilitates the creation of special-purpose vehicles (SPVs), assists in bank account setup, and coordinates the appointment of trustees where required. Clients explicitly acknowledge and agree to this policy when engaging Financely for advisory services related to standby letters of credit.



2. Types of Standby Letters of Credit Supported

Financely supports advisory and structuring for the following types of standby letters of credit:


  1. Performance Standby LC: Used to secure performance obligations in contracts or projects.
  2. Financial Standby LC: Ensures repayment of loans or credit obligations.
  3. Commercial Standby LC: Covers payment obligations in trade finance transactions.


All SLOC requests must demonstrate legitimate commercial or financial purposes, and Financely reserves the right to decline engagements lacking clear transaction rationale.


3. Regulatory Framework

Financely ensures advisory compliance with relevant U.S. laws and international guidelines, including:

  • Uniform Customs and Practice (UCP 600), where applicable
  • International Standby Practices (ISP98)
  • Uniform Commercial Code (UCC) Article 5 (U.S.)
  • USA PATRIOT Act and Bank Secrecy Act compliance
  • FATF Recommendations on AML/KYC procedures


Clients bear ultimate responsibility for ensuring compliance with jurisdictional requirements outside the United States.


4. No Guarantee of Issuance

Financely does not guarantee the successful issuance of any standby letter of credit. All final approvals are at the sole discretion of the issuing or collateral-providing institutions. Financely bears no responsibility or liability if the client’s SLOC request is declined or amended by third parties.


5. Underwriting & Deal Submission Procedure

The following process is implemented for all standby letter of credit advisory engagements:


  • Initial Documentation
    Clients submit transaction details including:
  • Fully completed application forms
  • Financial statements (audited preferred)
  • KYC information on key parties
  • Full details of collateral and underlying transaction
  • Proof of funding capacity for fees and charges


  • Transaction Analysis & Risk Assessment
    Financely conducts comprehensive underwriting covering:
  • Client’s creditworthiness and financial strength
  • Transaction viability and legitimacy
  • Collateral valuation and enforceability
  • Legal and regulatory compliance review
  • Preliminary structuring for the proposed SLOC issuance


  • Internal Approval
    A senior-level credit committee reviews the underwriting report.
    An internal risk rating is assigned based on collateral adequacy, client profile, jurisdictional risk, transaction complexity, and compliance considerations.


  • Submission to Liquidity Providers
    If internally approved, Financely submits the detailed proposal to selected third-party liquidity providers (issuing banks or collateral providers).
    Providers independently assess each transaction and decide on issuance and terms.


6. Creation of SPVs & Bank Accounts

Where necessary, Financely assists in structuring and incorporating special-purpose vehicles (SPVs) and helps establish corresponding bank accounts, ensuring:

  • Proper jurisdictional selection for optimal tax and compliance efficiency
  • Assistance with bank due diligence and documentation
  • Coordination with appointed trustees or fiduciaries to manage collateral and funds appropriately


7. Appointment of Trustees

Financely can facilitate introductions and coordination for the appointment of professional trustees or escrow agents. Trustees may hold collateral or manage distributions under defined contractual terms. All trustees appointed are independent third parties with relevant expertise, subject to client approval.


8. Internal Risk Rating

Financely applies an internal risk-rating system for each SLOC advisory request. The rating considers:


  • Transaction complexity
  • Client credit profile and previous transaction performance
  • Collateral strength and enforceability
  • Jurisdictional and compliance risk factors
  • Historical dealings with liquidity providers


This internal rating guides internal decision-making and is not disclosed externally. High ratings do not guarantee issuance by third-party liquidity providers.


9. Timelines

Clients should expect the following timelines:

  • Initial Assessment: 5 to 10 business days from full document submission
  • Detailed Underwriting: 15 to 30 business days, contingent on complexity and client responsiveness
  • Submission to Liquidity Providers: 5 to 10 business days post internal approval
  • Final Issuance: Determined solely by liquidity providers, typically 10 to 30 days from acceptance, but may vary significantly due to due diligence requirements or external factors


Financely bears no responsibility for delays caused by liquidity providers or clients.


10. Risk Acknowledgment

Clients understand and acknowledge that securing a standby letter of credit involves substantial financial and operational risks. Financely does not guarantee issuance, approval, or acceptance by liquidity providers. Clients must independently assess transaction suitability, perform due diligence, and obtain relevant advice from legal, financial, and tax professionals.


11. Disclaimer of Liability

  1. No Issuance or Performance Guarantee: Financely explicitly disclaims any responsibility for the ultimate issuance, acceptance, or performance of standby letters of credit.
  2. No Fiduciary Relationship: Financely provides strictly advisory services without assuming any fiduciary duty or obligation to any party involved.
  3. No Legal or Tax Advice: Financely does not provide legal, regulatory, or tax counsel. Clients must engage qualified third-party advisors for specialized advice.
  4. Third-Party Delays & Failures: Financely bears no responsibility for third-party delays, failures, or actions beyond its direct control, including actions by liquidity providers, banks, trustees, or governmental agencies.


12. Acceptance & Amendments

By engaging Financely for SLOC advisory services, clients acknowledge and agree to abide by all terms in this document. Financely reserves the right to amend this policy at its sole discretion. Changes are effective upon publication or notification to involved parties.

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