An SBLC is a legal guarantee issued by a bank on behalf of a client company, fund, or portfolio company, that serves as a commitment in lieu of a cash pre-payment, surety bond, deposit or escrow account for a financial or contractual obligation. The SBLC promises payment to a beneficiary (e.g., landlord, vendor, customer, lender) if the company fails to fulfill that obligation.
An SBLC is often used in lease agreements, contract bidding processes, real estate transactions, import/export business and other scenarios where a guarantee of performance or payment is required.
SBLCs are widely accepted in both domestic and international trade and finance as a reliable form of payment or performance guarantee.
Global trade finance
SVB Global Trade Finance can help improve agility and cash control with strategic solutions to extend runway and preserve working capital as you navigate leaps in growth and global expansion.
Letters of Credit (LCs)
Preserve cash with LCs that eliminate the need for pre-payments, deposits and escrow accounts.
Import / Export Expansion
Extend runway with lending and get expert guidance for successful global operations.
Scalable Solutions
Meet evolving needs from one transaction to a tailored global relationship platform.
Letters of credit provide options in lieu of cash
Explore new opportunities with Commercial Letters of Credit instead of pre-payments that help assure partners, vendors and clients that commitments will be fulfilled.
Scale more easily with strategic credit
Standby Letters of Credit may provide value such as:
- Loan collateral for a major purchase
- Payment assurance to secure a contract
- Lease commitment for new office or lab space or equipment
Reduce risk for import and export
Import/Export Letters of Credit
Support issuance of bank guarantees internationally. Help manage cash flow and mitigate risk in buying supplies and components globally, and insulate against fraud and credit risk with foreign buyers.
Simplify foreign payments
Documentary Collections
Streamline import/export payments with SVB’s global banking relationships to release import documents to buyers (upon payment or acceptance) and facilitate payments to overseas suppliers.
Get advisory expertise on global business
Leverage our decades of experience in Global Trade Finance to gain guidance and strategies to help navigate the complexities of international markets.
Gain insights on how to improve working capital
Securing CMS contracts for healthcare innovation with LCs
Learn from Global Trade Finance experts how Letters of Credit can help your company improve cash control while driving growth.
SBLCs for enterprise contracts: Keep cash on the balance sheet
Learn how Standby Letters of Credit help companies secure enterprise and government contracts and reassure counterparties.
Ready to learn more about trade finance?
Global Trade Finance FAQs
An SBLC can enable you to expand into new space while preserving working capital. Construction contracts often require payment assurances or performance guarantees. An SBLC provides that guarantee to contractors, suppliers, and other stakeholders, reducing their risk. It enables you to fulfill these contractual requirements, without having to pay cash up front, and can help avoid delays or disputes.
An SBLC also demonstrates your company's financial stability, credibility and commitment to the project. Providing this assurance may enhance your reputation with stakeholders, and help you obtain more competitive bids, facilitate smoother negotiations and secure better terms with project vendors.
Yes, an SBLC can often be used to assure the CMS of financial solvency and stability during the enrollment or revalidation processes. An SBLC can provide assurance that payment will be made even if a provider or supplier fails to meet their obligations (e.g., like a surety bond that guarantees a third party will pay if the contractual party cannot). By offering a reliable guarantee of payment, an SBLC helps foster trust and credibility with CMS, facilitating better contractual and regulatory relationships.
A CLC is typically used in trade transactions to ensure payment to suppliers. Payment is made by the bank.
A Standby Letter of Credit is more flexible and can be used in various situations beyond trade, including collateralization, escrow, bond, performance and contract guarantees and assurances. An SBLC is only paid out if the contract is not fulfilled.
Global Trade Finance may be ideal for innovation economy companies if you are…
- Looking for alternatives to paying deposits or upfront payments to secure leases or contracts
- Expanding into new countries (just getting started or scaling operations)
- Selling or buying goods overseas
Three of the most common forms of global trade finance are:
- Standby Letters of Credit: SBLC are issued by the bank on behalf of our clients to guarantee payment or performance instead of cash up front, to satisfy a lease, loan, contract bid, import/export deal and other needs.
- Import/Export Letters of Credit: help manage risk for buyers and sellers in cross-border transactions.
- Documentary Collections: coordinate the release of shipping documents with agreed upon milestones and facilitate cross-border payments.
Doing business globally can introduce a range of risks – from whether you will get paid or receive critical lab supplies, to events affecting the volatility of foreign currencies. Global Trade Finance services like Standby Letters of Credit can serve as guarantees between both parties for payment, order fulfillment and more. A SBLC can also serve as a performance bond, providing assurance to your customers when bidding on major contracts.
With SVB, you can count on fast, dedicated support from a Global Trade Finance specialist with experience working with tech and life sciences/healthcare companies. They can help end-to-end, from strategic programs for risk management and global expansion, to integrated solutions for preserving working capital such as Commercial or Standby Letters of Credit, lending and other banking services.