Letter Of Credit (LC)
A letter of credit (LC) application is a formal request made by a buyer (importer) to a financial institution to provide a guarantee of payment to the seller (exporter) under specified conditions. This document assures the seller that they will receive payment, provided that they meet the terms and conditions outlined in the LC, such as the submission of required shipping documents. The LC serves to reduce the risk for both parties in international trade transactions, offering security and confidence in the payment process.
Bank Guarantee (BG)
is a promise issued by a bank on behalf of a client (usually the buyer or borrower) to ensure that the bank will cover a specified amount of money if the client fails to meet their financial or contractual obligations. It serves as a security for the beneficiary (usually the seller or lender), providing assurance that they will be compensated in the event of non-payment or non-performance by the client.
Standby Letter Of Credit(SBLC)
SBLCs are often used in situations where the buyer’s performance is critical—such as in construction contracts, loans, or lease agreements. The seller can present the SBLC to the issuing bank to receive payment, typically after demonstrating that the buyer has failed to meet their obligations.