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A bank guarantee in the form of a letter of credit
Do you need to guarantee your cross-border transactions? Do you need security for payment of exported goods? Do you need to ensure that your international supplier fulfils its commitments under your agreement within the set period? If so, you or your company may need a standby letter of credit. |
Overview
A standby letter of credit is a good option if you want to be sure of being paid for goods or services that have been delivered, and also want the transaction to be covered by standard international regulations. It represents extra security for customers who do international business.
A standby letter of credit is also called a standby L/C.
When are standby letters of credit used in international transactions?
Standby letters of credit can be used in many different areas of international business. Common areas of use include:
- secure payment for goods or services
- when a contract is to be fulfilled
- when guarantee times for work or deliveries are to be fulfilled
- for renting premises
- as collateral for a loan
A standby letter of credit is a good option if:
- the parties find it hard to agree on the wording of a bank guarantee
- the parties differ in their views as to which country’s laws should apply
- the agreement stipulates regular deliveries over a long period
- the parties wish the transaction to be subject to standard international regulations
- the business parties require flexible security
Read more about how a standby letter of credit works
You are welcome to contact your local branch or one of our Trade Finance departments in Stockholm, Gothenburg or Malmö, so that we can tell you more about what we can do for your company.
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