If you want to finance your small business, the SBLC, standby letter of credit can be one of the best means to do that. Whilst financing your small business may seem like quite a tough job, the opportunity you get by financing SBLC, you shouldn’t miss it at all.
So what is a SBLC and how does it help you?
The Standby Letter of Credit in simple terms is basically a guarantee provided by the bank to your seller that if anything goes wrong and you, as a buyer cannot pay off the remaining amount, the bank will pay on your behalf.
However, the SBLC is more like a damage control and it isn’t likely to be used – unless, the matter is quite serious and there are no other options left. The SBLC is one of the best ways to prevent contracts from going unfulfilled if your company closes down, declares bankruptcy, or your company is unable to pay for the goods and services provided by the seller.
Financing an SBLC can prove to be really beneficial for you as it gathers a lot of trust among the sellers. They are more likely to trust someone who has an SBLC or a bank guarantee than to trust someone who doesn’t acquire any of those. Why? Because the seller feels that owning an SBLC from a bank means that the buyer has a good financial history in the past and that is likely to continue in the future.
In other benefits, an SBLC from a reputed bank can get you clients both nationally and internationally. It is because even if the seller finds it hard to trust you, they won’t find it hard to trust the bank.
How to obtain SBLC?
Obtaining an SBLC is quite easy. All you have to do is reach out to reputed bank or a financial institution and have discussion about the same. The bank however, will charge you a standby letter of credit fee of 1-10% of the SBLC amount before issuing the letter. The fee is charged every year from the date of issuing the letter until the validity for the same ends.