A Stand By Letter of Credit or SBLC is a payment guarantee issued by a bank or financial institution that can be used for a wide range of commercial and financial transactions. Typically it acts as a payment guarantee of last resort if the contracted obligations are not met or are defaulted upon. A SBLC is a direct guarantee of the bank to pay the recipient on a client’s behalf if they default..
SBLC’s also offer protection the seller (exporter, in getting paid, and the buyer (importer), in receiving the goods as agreed.