Use of sblc – things you need to know and care for

USE OF SBLC – THINGS YOU NEED TO KNOW AND CARE FOR

•THE TERM SBLC REFERS TO THE STANDBY LETTER OF CREDIT THAT BASICALLY IS A GUARANTEE PROVIDED BY THE BANK WHICH SAYS THAT IN ANY CASE IF YOU ARE UNABLE TO PAY THE MONEY TO SELLER, THE BANK WILL PAY ON BEHALF OF YOU. •THERE ARE PLENTY OF BENEFITS OF USING THE SBLC AND MOST BUSINESS MEN DO NOT FAIL TO RECEIVE ONE BECAUSE OF THE MANY BENEFITS IT PROVIDES. •HOWEVER, WHEN YOU CHOOSE TO INVEST IN THE SBLC FINANCING, THERE ARE SEVERAL THINGS THAT YOU SHOULD KNOW ABOUT AND UNDERSTAND. •THE SBLC IS BASICALLY A SAFETY MECHANISM FOR ANY SORT OF CONTRACT SERVICE. KNOWN AS THE “PAYMENT OF THE LAST RESORT”, AN SBLC CAN HELP YOU MAKE GREAT DEALS BOTH NATIONALLY AND INTERNATIONALLY.

•IF YOU HAVE A BUSINESS AND YOU ARE WILLING TO EXPAND YOUR BUSINESS IN THE INTERNATIONAL PLATFORM, ACQUIRING AN SBLC CAN HELP YOU GAIN A LOT OF DEALS. •HOWEVER, THERE ARE SOME MYTHS SURROUNDING SBLC AND ITS USES. THESE MYTHS MAKE THE CONCEPT OF SBLC QUITE HAZY AMONG THE USERS AND THEREFORE YOU SHOULD BE WELL AWARE OF ALL THE TERMS AND CONDITIONS OF BUYING AN SBLC.

MYTHS ABOUT SBLC •AN SBLC CAN BE LEASED AT A RATE OF 2% TO 5% OF THE LETTER OF CREDIT FACE VALUE. • THEN THAT LEASED FINANCIAL INSTRUMENT CAN BE USED TO PAY FOR GOODS AND IN THE END, THE PERSON WHO IS LEASING THE SBLC DOES NOT HAVE TO ACTUALLY PAY FOR THE GOODS. •THE ABOVE MENTIONED STATEMENT IS COMPLETELY A HOAX AND IS A MYTH. •HOWEVER, THE TRUTH IS, YOU CANNOT LEASE AN SBLC AND THEN USE IT FOR ANYTHING MORE THAT AN ASSURANCE TO THE SELLER OF GOODS. • THE SELLER WILL BE PAID FOR THE GOODS UPON SATISFACTION OF THE TERMS AND CONDITIONS OF A BUY-SELL ARRANGEMENT.

IF THE BUYER IS NOT BEING ABLE TO PAY THE MONEY TO THE SELLER, THE BANK ISSUING SBLC IS LIABLE TO PAY THE MONEY AND IT HAS TO PAY THE ENTIRE AMOUNT TO THE SELLER. HOWEVER, THE BANK ISSUING THE SBLC WILL TAKE ANY SORT PRECAUTIONS THAT IT NEEDS TO IN ORDER TO MAKE SURE THEY DO NOT HAVE TO PAY ANY MONEY IN THE NAME OF SBLC AND MAKE SURE THAT THE SELLER GETS THEIR MONEY WITHOUT ANY HASSLE FROM YOU.