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Standby Letters of Credit (SBLC)

Soludis > Financial instruments eligible for PPP > Standby Letters of Credit (SBLC)

Standby Letters of Credit (SBLC)

How to use it

A standby letter of credit  is a guarantee of payment by a bank on behalf of their client. It is a loan of last resort in which the bank fulfills payment obligations by the end of the contract if their client cannot.
The standby letter of credit is never meant to be used, but prevents contracts from going unfulfilled in the event your company closes down, declares bankruptcy, or is unable to pay for goods or services provided. Standby letters of credit help prove a business’ credit quality and repayment abilities.

 

How to use SBLC in Private Placement Program ?

If you have cash, the first solution is to generate your own SBLC and transmit it to the trading platform through a bank SWIFT. Little interest, because of the discount (LTV) you lose in portfolio value (~ -20%), the only interest is part of a deconsolidation or a destructured investment policy and that your cash do not leave your bank account. But the trading platform will prefer a Bank Guarantee (BG) that is more suitable than a SBLC.

If you are a SBLC beneficiary, you can either ask your issuer to issue it directly via SWIFT on your « Interactive Brokage Account », if you have one. If you do not have this type of trading account, you must receive it in your bank. On receipt at your bank, she will send it via SWIFT to the trading platform trading account. You can also consider a monetization, it is somehow a financial advance on the value of this instrument. In fact you give up your SBLC in exchange for an immediate payment (with a discount). Cash collected can be invested directly in the Private Placement Program.

Warning: SBLC for sale

Given the very particular profile of this financial instrument (nominative and for a specific transaction), it is almost useless to try to buy this kind of financial instruments, you are almost sure to find a scam, or on a SBLC of convenience issued by unrecognized financial corporations or banks to be eligible for a Private Placement Program.

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