Standby Letters Of Credit (SBLC)


standby Letters of Credit (SBLC)

STANDBY LETTERS OF CREDIT are often used to provide security for an obligation, such as a lease or other long-term contract. Landlords may require a deposit or a standby letter of credit that guarantees payment from the issuing bank if a tenant falls in arrears. Often, large contracts may require at least one of the parties to have a standby letter of credit in place for the transaction to move forward.

Basically, a standby letter of credit guarantees the beneficiary that it will be paid from a creditworthy bank if it's unable to get paid by its counterparty in a transaction. Accordingly, these standby letters of credit allow for complex and high-risk transactions to proceed which would otherwise have been stifled by a lack of funds, asymmetric risks or a lack of faith in the transacting parties. Radission provides standby letters of credit, allowing transactions to happen that otherwise might be considered too risky by the receiving entity.

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