HOW DOES THE STANDBY LETTER OF CREDIT (SBLC) PROCESS WORK?
Step 1: Application
Fill out and return the Standby Letter of Credit (SBLC) application with the documents for your deal (Pro Forma Invoice, SPA, Contract, etc.)
Step 2: Issuing of Draft
A SWIFT MT760 draft of the Standby Letter of Credit (SBLC) will be created for you and your seller/exporter to review and confirm.
Step 3: Draft Review and Opening Payment
a) Finalize the draft between you and your seller/exporter and sign off on the draft (changes are free of cost).
b) We issue you a payment invoice for the SBLC, which you arrange to pay.
c) Once we receive your wire payment, we will release the finalized Standby Letter of Credit (SBLC) to the bank for issuance and delivery.
Step 4: Issuance
More often than not, the bank will issue the Standby Letter of Credit (SBLC) within 48 hours of release.
Once issued, a copy of the SBLC will be emailed to you as it is transmitted by a MT760 SWIFT message to the beneficiary, including the reference number of the SBLC.
Your seller’s bank will receive and confirm the Standby Letter of Credit (SBLC) transmission soon thereafter.
Step 5: Presentation of Documents
Once the seller/exporter has prepared and loaded all goods for shipment, they must send the specified documents for that particular shipment to their own bank.
Their bank will then forward the documents to our bank, and we will email you copies of the presentation and all of the documents that were submitted by the seller/exporter for your review and approval.
Step 6: Payment of Goods
Before our bank can release the original documents, we must receive payment for the presentation.
Once we have received payment, we cosign the documents to you and send them to your freight forwarder or to whomever you wish. This completes the transaction.
The Standby Letter Of Credit (SBLC) is governed by a set of guidelines known as the Uniform Customs and Practice (UCP 600), which was first created in the 1930s by the International Chamber of Commerce (ICC).