Key Differences Between A Letter Of Credit & Standby LC
Letter of credit (LC) & Standby Letter of credit (SBLC) are both the most popular, & reliable trade finance instruments used by global importers & exporters in international trade to reduce the risk of payment failure & to ensure financial stability.
A Letter of credit is a primary method of payment, while Standby LC is used when there’s a risk of buyer’s non-performance during a transaction. So, what is the difference between an LC and SBLC? Let’s check out:
Letter of Credit Vs Standby Letter of Credit
Both the letter of credit (LC), and the Standby letter of credit (SBLC) are payment guarantee instruments used in international trade. In this article, we’ve discussed the key differences and usage between LC and SBLC. Take a look:
What is a Letter of Credit?
Under a letter of credit service, the issuing bank guarantees an on-time & full-fledged payment to an exporter on behalf of its client ie. importer for the ordered goods or services. But in the event, if the importer defaults in payment or is unable to fulfill the terms & conditions of the LC contract, then, the issuing bank will compensate the beneficiary ie. the exporter.
Read more: https://www.axioscreditbank.com/blogs/key-differences-between-a-letter-of-credit-standby-lc#letterofcreditservice#StandbyLC#letterofcredit#Differences#tradefinanceinstruments#StandbyLCagreement
Key Differences Between A Letter Of Credit & Standby LC
Both the letter of credit and standby letter of credit are payment instruments used in international trade but they are slightly different. Find out the key differences here.
How Investment in Trade Finance Can Help SMEs Thrive?
A healthy trading system depends on the availability of finance. Up to 80% of current Global Trade Finance is backed by credit insurance or other financing. However, there are sizable gaps in the available resources, making it difficult for many businesses to access the necessary financial tools. With sufficient trade finance, businesses can have the resources they need to trade and grow, taking advantage of opportunities for development and expansion.
Small and medium-sized businesses (SMEs) need help finding financing with favourable terms. This is especially concerning because SMEs constitute a significant force in trade, employment, and economic growth. According to research, SMEs encounter these obstacles in developed and developing nations, but the difficulties are most significant in lower-income countries.
Trade digitalization has no definition, but it typically entails the digital twining of supply chains, the dematerialization of documents, and the digital data exchange. It means adding an electronic or computerized layer to business processes.
A key distinction in the new reality is that digitalization also refers to using digital channels to assist SMEs in creating value. By doing away with paper-based transactions, SMEs can increase productivity and transparency while avoiding delays brought on by physical documents getting misplaced or destroyed along the way.
Read more: https://www.emeriobanque.com/blogs/how-investment-in-trade-finance-can-help-smes-thrive#GlobalTradeFinance#tradefinance#supplychains#SMEs#TradeFinanceServices#Letterofcredit#Tradefinanceinstruments
How Investment in Trade Finance Can Help SMEs Thrive?
From secured payment & sound cash flow to explore new market opportunities. Check out the reasons how SMEs can benefitted by investing in trade finance services.
African Development Bank Supports Bank One With $40 Million Trade Finance Package
As per the latest news, the African Development Bank is supporting the Bank One of Mauritius by granting a $40 million trade finance package to boost its capacity to provide trade finance facilities to SMEs, local corporates and other important areas in Mauritius and across Africa.
The above-mentioned package consists of a $25 million risk participation agreement and a $15 million transaction guarantee as per the announcement.
This transaction guarantee will enable the Bank to provide up to 100% guarantee to confirming banks for the risks of payment failure arising from the confirmation of trade finance service issued by Bank One. On the other hand, the risk participation arrangement will initiate up to 50% guarantee cover on a portfolio basis to boost the trade finance transactions started by issuing banks in area member nations. In short, this financial backing will help Bank One strengthen its capacity to cater to the trade finance requirements of key sectors.
“Looking at the cross-sectoral practices of trade, the proposed funding, while utilizing Bank One’s footprints, is supposed to upgrade the African Advancement Bank's endeavours to coordinate Africa and enhance the quality of life of African residents,” stated the African Development Bank Head of Trade Finance Lamin Drammeh.
Read more: https://www.emeriobanque.com/news/african-development-bank-supports-bank-one#tradefinanceservice#AfricanDevelopmentBank#transactionguarantee#tradefinanceinstruments#financialservices
African Development Bank Supports Bank One With $40 Million Trade Finance Package
The African Development Bank approves a $40 million trade finance package to support the Bank One of Mauritius to provide trade finance facilities to SMEs.
