Standby Letter of Credit Procedure

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Step-by-step procedure for applying and obtaining a standby letter of credit (SBLC)

Scenario 1: With collateral

1. Contact a bank and complete an application form. The application form will typically request information about the transaction, the applicant, the beneficiary, and the amount of the SBLC.
2. Provide the bank with information about the collateral. The bank will assess the value of the collateral to determine how much of the SBLC they are willing to issue.
3. Sign an agreement with the bank. The agreement will outline the terms and conditions of the SBLC, including the repayment schedule and interest rate.
4. Provide the bank with the collateral. The bank will hold the collateral until the SBLC is repaid.
5. The bank will issue the SBLC to the beneficiary. The SBLC will guarantee payment to the beneficiary in the event of the applicant’s default.

Scenario 2: Without collateral

1. Contact Financely to help you raise funds to back the SBLC. Financely has a network of private credit lenders who are willing to lend to businesses of all sizes. Collateral for an SBLC is typically raised through either a promissory note or a private placement memorandum.
2. Once you have raised funds, contact a bank and complete an application form for an SBLC. Provide the bank with information about the transaction, the applicant, the beneficiary, and the amount of the SBLC. Provide the bank with the funds to back the SBLC.
3. Sign an agreement with the bank. The agreement will outline the terms and conditions of the SBLC, including the repayment schedule and interest rate.
4. The bank will issue the SBLC to the beneficiary. The SBLC will guarantee payment to the beneficiary in the event of the applicant’s default.

Financely specializes in capital raising for lower middle market companies. If you are a lower middle market company and require assistance with raising funds to back an SBLC, we can help.

We have a network of private credit lenders who are willing to lend to businesses of all sizes.

To learn more about our services, please visit our website or contact us directly to book a consultation or request a quote.

Please note that we are not issuers of SBLCs, nor are we a securities broker/dealer. We merely facilitate business between our clients and banks.