Documentary Letter of Credit
Stand By Letter of Credit
Types of Stand By Letter of Credit
- Financial Stand By Letter of Credit
- Performance Letter of Credit
Sblc funding or sblc loans work with financial stand by letters of credit. If you are looking for a certain type of sblc to provide suppliers, you would request a financial stand by letter of credit.
SBLC Finance Process
Often times a business owner will turn to a finance company for leverage in issuing letters of credit. The sblc funding process may vary slightly between lenders but the below is a general outline to consider.
- The buyer provides the seller with DLC or SBLC from their bank or financial institution
- Seller accepts DLC or SBLC as guaranteed payment for buyer to purchase goods or services from seller
- Goods or services are exchanged
- Seller presents DLC or SBLC to their bank with required documents and requests payment
- Sometimes SBLC are used to support SBLC loans
What is the difference between sblc and dlc?
An SBLC is a stand by letter of credit which is used as more of a payment guarantee. An SBLC is drawn upon in the event of non-payment by the customer or buyer. The sblc funding process is used as a back up. A DLC (Documentary Letter of Credit) is used as a payment tool to coordinate payment between two parties as terms of the letter of credit are met.
This is the same for questions regarding a standby letter of credit vs commercial letter of credit.