If you hold a standby letter of credit or bank guarantee, it can sometimes support financing. This guide explains the basics, what lenders require, and the red flags that cost businesses money.
A standby letter of credit (SBLC) is a bank's undertaking to pay a beneficiary if the applicant fails to meet an obligation. A bank guarantee works in a similar way. Both are issued by a bank for its own customer, against that customer's credit standing or collateral.
A lender may extend finance with the instrument as security. The amount advanced is a percentage of the instrument's face value, and it depends on the issuing bank's strength, the lender's policy and the structure chosen, for example recourse or non-recourse. Before releasing funds, the lender verifies the instrument directly with the issuing bank.
Advance rates, tenors and pricing are set by lenders and vary between them, so we don't publish figures here.
Real instruments are issued by a bank against the applicant's own credit or collateral. Be wary of anyone offering to supply one from a third party's account.
Advance fees requested before the instrument is verified or any facility is approved in writing.
Arrangements that let another party withdraw fees from an account opened in your name.
An issuer or lender whose licence and identity you can't confirm independently.
Also be cautious of guaranteed funding and unusually short timelines. Genuine facilities depend on bank due diligence.
In a free advisory session we can tell you whether your instrument and situation are likely to be financeable, what lenders will ask for, and what to avoid. If you later want help approaching lenders, that's optional and agreed separately.
No. The issuing bank's standing and the instrument's wording both matter, and the lender must be able to verify it.
No. Team Authentic is not a bank or lender and doesn't issue instruments. We advise.
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