Standby Letter of Credit

A Standby Letter of Credit (SBLC) is a financial guarantee issued by a bank on behalf of a client, ensuring that payment will be made to a third party if certain conditions are met. It's often used in business transactions as a safety net, assuring the recipient that they will receive payment even if the client fails to fulfill their obligations. The SBLC acts like a backup plan: if the client doesn't pay or deliver, the bank steps in to cover the payment, which provides confidence and trust in the transaction between parties.