What is SBLC and buyers credit

Question

Accepted Answer

SBLC stands for Standby Letter of Credit and is a financial instrument used in international trade. Buyers credit is a type of short-term financing provided to importers.

SBLC is a guarantee issued by a bank on behalf of a client to ensure payment to a beneficiary if the client fails to fulfill their contractual obligations.
It is commonly used in international trade to provide assurance to the seller that they will receive payment even if the buyer defaults.
Buyers credit, on the other hand, is a type of financing provided by a bank to an importer to facilitate the purchase of goods or services from a foreign supplier.
It allows the importer to defer payment to the supplier and obtain better terms, such as extended credit periods or lower interest rates.
Buyers credit is typically used when the importer does not have sufficient funds to make immediate payment or wants to optimize their cash flow.
For example, a company in the United States wants to import goods from a supplier in China. To ensure the supplier receives payment, the company obtains an SBLC from their bank. Additionally, if the company needs financing to make the purchase, they can apply for buyers credit from the bank.

Accepted Answer

Payment guarantee in case of failure of performance, completion