A Standby Letter of Credit (SBLC) or Bank Guarantee (BG) is a financial instrument issued by banks on behalf of a client to serve as a “payment of last resort.” It provides security in case a business fails to fulfill contractual obligations, offering confidence to investors, suppliers, and partners.

Although an SBLC/BG is not a replacement for immediate cash payments, it ensures business obligations are met even in cases of insolvency or financial difficulty. This makes it a valuable tool for businesses looking to secure financing, close large transactions, or gain credibility with investors.

How Does SBLC Work?

• Financial SBLC – Guarantees payment if contractual obligations aren’t met.
• Performance SBLC – Ensures that service or project requirements (quality, cost, and deadlines) are fulfilled.
• Advance-Payment Standby – Protects against the misuse of advance payments.
• Bid-Bond/Tender Standby – Ensures the winning bidder executes a contract.
• Direct-Pay Standby – Acts as the primary method of payment without requiring default.

Why Businesses Use SBLC/BG

✅ Secures Large Business Deals: Companies use SBLCs to assure suppliers and investors of financial credibility.
✅ Facilitates International Trade: Reduces risk for cross-border transactions.
✅ Enhances Business Credibility: Demonstrates financial strength to potential partners.
✅ Supports Loan & Credit Approvals: Many financial institutions consider SBLC/BG as collateral.

The Reality of SBLC/BG Fraud

While SBLC/BG is a legitimate financial instrument, it is also an area where fraud is common. Fraudsters often operate by:
❌ Offering “too good to be true” deals with unrealistic returns.
❌ Demanding upfront payments with no verifiable banking trail.
❌ Using unauthorized intermediaries who claim to have “special access” to issuing banks.

How to Protect Yourself

🔹 Work only with licensed financial institutions and recognized providers.
🔹 Verify SBLC/BG compliance under UCP-600 or URDG-758 international banking rules.
🔹 Ensure transactions are processed through secure banking channels (SWIFT MT-760).
🔹 Be cautious of “leased” SBLC/BG schemes—many cannot be monetized or used for financing.

Key Facts About SBLC/BG

✔ Issued for a standard period of one year and one day, extendable upon agreement.
✔ Can be used to secure loans, credit lines, and trade deals.
✔ Only banks and licensed financial institutions can legally issue SBLC/BG.
✔ Monetization is typically possible for owned SBLC/BG, while leased instruments have restrictions.
✔ Fraudulent SBLC/BG often originates from unauthorized providers—always verify authenticity.

SBLC/BG FACTS:

Whether purchased of leased, SBLC / BG is issued for a “term” having validity normally for 1 year and 1 day which may extend up to multiple years depending on the Provider’s own discretion and Provider’s level of comfort with the Beneficiary.

1. 1. Banks will issue an SBLC/BG to any of its customers if they have sufficient cash in their bank account or available balance in their credit line (if they are already availing a credit line from the bank). It’s a complete myth that “Banks Do Not Issue SBLC/BG). This is the “Primary Market” transaction.
   2. Providers of SBLC/BG are a part of the “Secondary Market” transactions. SBLC/BG Providers are high net worth corporations or individuals who hold bank accounts at the issuing bank that contain significant cash sums (assets). SBLC/BG Provider would often be a collateral management firm, a hedge fund, or private equity company. SBLC/BG Provider instructs its issuing bank to secure and encumber cash in his own account and authorizes the bank to “cut” (an industry terms meaning to create a financial instrument such as SBLC/BG ). Effectively, the SBLC/BG is “leased” or “sold” to the Beneficiary as a form of investment since the Provider receives a return on his commitment.
   3. SBLC/BG is issued under ICC/URDG758 (UPC 600) protocol and is readily accepted by almost all International as well as Private Banks.
   4. SBLC/BG is supplied by the Issuing Bank of the Provider to the Beneficiary’s bank account at the Receiving Bank and is transmitted inter-bank via the appropriate SWIFT platform alone (MT-760).
   5. The Provider and the Beneficiary agree to enter into a Collateral Transfer Agreement (CTA) which governs the issuance of the SBLC/BG. The SBLC/BG is specifically issued to the Beneficiary for a defined purpose and each contract is bespoke. It is effectively a form of “Securities Lending” and often a derivative of “re-hypothecation”. The fact that there is an underlying agreement (the CTA) has no bearing on the wording or construction of the Guarantee (SBLC/BG). This allows the Beneficiary to use the SBLC/BG to raise credit, to guarantee credit lines and loans or to enter trade positions or buy/sell contracts.
   6. SBLC/BG is valuable in the secondary and tertiary markets, and this also creates an environment for Intermediaries to profit on the leasing and selling of SBLC/BG. Unfortunately, this also creates misunderstandings and opportunities for fraud. Scammers keep trying, by imposing their “procedures” which in general, involve rushed deals with no hard copies to follow, advanced payments, and so on.
   7. By its own nature and definition, only banks can legally issue SBLC (Stand-By Letters of Credit) or BG (Bank Guarantee). This is not only common sense, but actually regulated by banking laws in most countries since these are debt obligations issued by banks.
   8. SBLC/BG must be UCP-600 compliant and hence it must be issued by a licensed bank alone. Otherwise, it will not be UCP-600 compliant, regardless of the wording of the document. If it is not UCP-600 compliant, no bank will ever accept it as collateral or even as a documentary credit. While it is true that URDG-758 changed this from banks to “a bank, other institution or person” may act as a guarantor, the fact is that URDG-758 rules implied that financial stability of the guarantor is obligatory, and that the issuance of said documents shall be governed by the internal legislation of each country. Regardless, most banks will only accept documentary credit from other banks, due to their financial stability and their full compliance with local laws.
   9. Banks, in general, will monetize only an “owned/purchased” SBLC/BG. They will not monetize a “leased” SBLC/BG. In contrast to a purchased or owned SBLC where the buyer becomes the official owner of the instrument and in turn would be able to lease the SBLC out to a Third Party, a “leased SBLC” cannot be “leased out” any further.
   10. There are private Monetizers who would monetize a “leased” SBLC/BG. Some Monetizers will, however, only accept SBLC/BG with CUSIP or ISIN Numbers. This means they will NOT accept a fresh cut bank guarantee, ONLY seasoned instruments. Seasoned BG’s cost more and generally are only available to be purchased from secondary owners not banks.
   11. Although a leased SBLC/BG is not considered an “asset” (a leased SBLC/BG is not trading securities, trading debt instruments, or trading investment funds. There is no public market for the trading of SBLC/BG. All SBLC/BG transactions are private transactions), it can still be monetized, discounted or funded (whereby the SBLC/BG is turned into usable cash) by a resourceful Monetizer. Remember, SBLC/BG is after all a written obligation of the issuing bank to pay a sum on to a beneficiary on behalf of their customer in the event that the customer himself does not pay the beneficiary. The Instrument/ Security remains valid during the term before the Expiry Date. Such resourceful Monetizers possess the capacity to a draw a line of credit against “leased” SBLC/BG and use part of the cash to pay the client his “Non Recourse Monetization Payment” (often 40% to 65% of the value of the Leased Bank Instrument known as “Loan To Value” (LTV). The Monetizer then takes the balance of the money from the Line of Credit and places these funds into Trade / PPP using a proprietary trading platform. This platform is often a group of experienced bank traders who use the Monetizers cash and trade it generating significant profit returns on a weekly or monthly basis. Often the Platform uses normal trading risk protection strategies to ensure the Monetizers funds receive significant protection from all trading downside risk.
   12. Most people often confuse the term NOT RATED with the fact that some SBLC/BG issuing entities are not real banks, but private companies offering consulting services, and sometimes, issuing documents that are beyond their legal and financial capacity, hiding themselves behind the excuse that because they are an “offshore bank” or a foreign corporation or because they only deal with foreigners, they do not need to hold a banking license or comply with reserve deposits with the Central Banks of the jurisdictions from where they operate. The reality is, a rating is just an opinion given by one person or company, about the credibility of the bank or institution what the rating is about; but this has almost nothing to do with the truth, that the documents in question are worthless not because of the credit rating of the issuer, but because the issuer is not a bank.
   13. For political reasons, most Eurozone regulated banks avoid, as much as they can, to work with banks of certain countries. Trying to monetize an instrument issued by a Latin American country, or even China is almost impossible!! Even Europe is not free of that problem; for example, while the list of embargo banks from Russia and Ukraine is very small, most Eurozone regulated banks prefer to not accept as collateral instruments issued by any Russian or Ukraine based banks, they say it is to reduce their risks as much as possible, and to avoid working with banks that while not currently on the embargo list, can be included in said list at any time. Some other countries have strong, reliable and highly praised banks with excellent credit ratings, like Azerbaijan, yet almost no Eurozone regulated bank wants to work with instruments issued by them; this limits the ability of most monetizers to work with instruments from banks of these countries regardless of the credit rating of the bank.
   14. To determine if a borrower is worthy of an SBLC/BG, many banks will undertake a credit analysis. Credit analyses focus on the ability of the organization to meet its debt obligations, focusing on default risk. Lenders will generally work through the five C’s to determine credit risk: the applicant’s credit history, capacity to repay, its’ capital, the loan’s conditions, and associated collateral. This form of due diligence can revolve around liquidity and solvency ratios. Liquidity measures the ease with which an individual or company can meet its financial obligations with the current assets available to them, while solvency measures its ability to repay long-term debts. Specific liquidity ratios a credit analyst may use to determine short-term vitality are current ratio, quick ratio or acid test, and cash ratio. Solvency ratios might entail the interest coverage ratio.

While trying to buy or lease SBLC or BG, one must understand the importance of the following:

SWIFT MT-799 PROOF OF FUND

1. 1. SWIFT MT-799 PRE-ADVICE
   2. SWIFT MT-799 BPU (BANK PAYMENT UNDERTAKING)
   3. SWIFT MT-760 SBLC OR BG

Stand By Letter of Credit (SBLC) Bank Guarantee (BG) Letter of Credit (LC) = MT760

SBLC is a Stand By Letter of Credit which is used for international trading purposes. SBLC is the Singapore form of the well known as Bank Guarantee(BG) Document Letter of Credit (LC). The Swift code is MT760.

SBLC (and BG) could be used to enhance client’s ability to apply for a line of credit with client’s bank, furthermore, it could be used as collateral when client’s bank is asking for additional comfort for Project fund purpose. SBLC, we deal in are genuine 100% cash-backed and therefore usable as collateral. Our issuers only use top World Banks where are guarantees worldwide acceptance of client’s SBLC.

The SBLC is generally issued for 90 days and 180 days, anyway it is able to extend up to 1 year 1 day once the issued SBLC is transferred to client’s bank via the Swift protocol of MT760.
Absolutely, Leasing of an SBLC comes at a cost. Financing client’s project by using SBLC, the client should prepare the fee to the consultants facilitating the process. To successfully apply for SBLC the most points are awareness as following list:

* 1. The good project presentation is required
* 2. The great bank funding the client’s project based on the supporting collateral of an issued SBLC is most importance.
* 3. Settlement the leasing fee by cash for the leasing of SBLC is required

Once the leasing fee is paid, the contract is signed, and the bank instrument is processing within 7 bank’s working days. MT-760.com could provide BG’s, SBLC’s and DLC, which could be blocked or delivered via SWIFT. Typical projects we have had successful applications for are:

* – Construction and Development
* – Resorts -Building or Upgrading
* – Growing a Company
* – Import –Export Business

Disclaimer

We have frequently been approached with requests that involve actions or transactions which may be deemed unethical, immoral, deceptive, fraudulent, or illegal. We would like to explicitly state that we will not engage in any transaction or activity that we consider to be “uneasy” or that our legal counsel advises is in violation of any laws, regulations, or ethical standards. As such, any requests for illegal or questionable processes will be unequivocally declined.

For clients who are real estate developers seeking financing for a project, we are able to offer assistance. Specifically, we can facilitate the issuance of a financial instrument on behalf of the client, which may or may not be eligible for use as collateral for a loan. The eligibility of the instrument as collateral depends on the specific terms under which it is issued. In certain circumstances, we, or one of our trusted partners, may issue a fully cash-backed Standby Letter of Credit (SBLC), drafted with a “site draft.” This SBLC would be unencumbered and issued in the client’s favor (or the lender’s benefit), allowing it to potentially be “cashed” or “called” on demand, typically in relation to securing financing for the real estate project.

In such cases, we would require the client to provide collateral or enter into a joint venture agreement. For more details, please contact us directly.

In other instances, the SBLC may be issued for Credit Enhancement purposes, where it cannot be cashed or called upon. However, it is imperative that this instrument is not used to deceive or defraud a financial institution. If the client is questioned by a bank or lender regarding the origin of the instrument, we strongly insist that the client acts with full transparency, honesty, and integrity in all communications. We emphasize that our commitment is to maintain the highest ethical standards in all transactions, ensuring that all processes comply with applicable laws and regulations.

Program Highlights

* – Both Proof of Funds and SBLC services Available
* – USD 500K to 50 Million
* – Terms from 90 days to 12 months, discounts for longer term usage
* – You have access to all paperwork in less than 72 hours after confirmation
* – Brokers protected and paid for referrals!
* – No Credit Check or Financial Statements Required
* – Standard bank Verification of Deposit provided for all accounts
* – Bank accounts opened and confirmed in writing by bank officers
* – SWIFT MT799, MT760, MT720, and MT999 confirmation options available
* – Corporate envelope SWIFT MT798 and MT710 services available.