What Is a Stand-by Letter of Credit?

Stand-by Letter of Credit

According to the site Credit Management World, a stand-by letter of credit is a written obligation from a bank to pay a sum of money to a beneficiary on behalf of the bank’s customer in the event that the customer does not pay.

A Commercial Letter of Credit is taken as Guarantee to be used in payment of goods and services. The Standby Letter of Credit issued is taken as guarantee that the applicant, the customer of issuing bank will execute responsibilities under an agreement. In other words, if an applicant fails to meet the promises made, the beneficiary draws on standby. According to the Controller of Currency, Standbys defined as, ‘any letter of credit or a similar document issued which mentions responsibilities to the beneficiary on the side of issuer.

The SBLC (Standby Letter of Credit) mentions details regarding-

1. To pay back the money borrowed or advanced to or for the account of the account party.

2. To pay on account of an indebtedness undertaken by the account party.

3. To pay in case of default by the account party in meeting of any promises made.

In the first condition, the bank which issues the SBLC agrees to pay back the money advanced or borrowed in case if applicant fails to pay. For example, a U.S. bank which offer finance to local unit of a foreign business may require SBLC payable to the bank from the foreign unit’s bank to bear the loan. In case, if local business fails to repay the loan, the U.S. bank rely on the standby to recover the unpaid loan amount.

The SBLC may also be used to guarantee the payment of invoices for sales made on open account. The purchasing party may request his bank to provide SBLC to the seller with the criterion that the Standby may be drawn on in case if outstanding bills amount are not paid within the asked time duration. If the purchasing party fails to pay on time and original invoice is unpaid, the seller has the complete authority to draw on the standby by presenting a draft, copies of the due invoices and letter with clear mention that invoices are due.

Another popular use of SBLC is to use as performance bonds or bids. The business which bid on contract to offer goods and services may be required to supply a bond or SBLC which may be drawn if business fails to fulfill the bid awards. Standby Letter of Credits are also taken is use to guarantee performance under contractual deals. For example, a builder may produce SBLC to guarantee fulfillment with government regulations and building codes. Such types of standby are termed as performance bond and may be used to make sure on time delivery of goods and services.

Both performance bond and bid standbys are payable when presented along with a request letter with mention that the applicant or buyer has failed to keep promises or make payment on time.

Bank Guarantee

A stand-by letter of credit can help facilitate a transaction by providing comfort to the beneficiary. The stand-by letter acts as a guarantee from the bank that the beneficiary will be paid for his goods or services.

A Solid Agreement

The stand-by letter obligates the bank to make payment, even if there are disputes between the customer and the beneficiary.

Collateral

The customer applying for the stand-by letter of credit must have a credit line or collateral equal to the value of the letter. The assets are frozen by the bank until the transaction is completed.

Popular in America

The stand-by letter of credit is used primarily in the United States and is often called a non-performing letter of credit, because it serves only as a backup should the buyer fail to pay as agreed.

Typical Uses

Stand-by letters of credit are used to guarantee repayment of loans, to ensure fulfillment of a contract, and to secure payment for goods delivered by third parties.

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Daniel Goodman

CALL ME DIRECT 1-(972)704-1696

www.blockedfunds.com

BlockedFunds.com is the premiere agency for equity and debt-secured cash accounts, on a fixed-return basis, for Proof of Funds uses. We provide organizations and individuals the capability to complete long-term financing or meet other on-going project needs.

Toll Free:        +1(888)625-7518

Toll Free Fax:    +1(888)625-7518

Local Phone       +1(214)296-9552

International     +1(214)716-5018

International FAX +1(214)613-1640

Email: info@blockedfunds.com

Skype: goodman.atoztask

Web  : http://www.blockedfunds.com

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Blocked Funds

VERBIAGE OF SWIFT LC OR SBLC

VERBIAGE OF SWIFT LC OR SBLC

From :               SENDING BANK

TO:

BANK:

ADDRESS:

SWIFT:

ACCOUNT NR:

ACCOUNT NAME:

IN FAVOR OF:

PLACE OF ISSUE:

LETTER OF CREDIT NUMBER:

DATE OF ISSUE:

DATE OF MATURITY:

DATE OF EXPIRATION:

APPLICANT:

BENEFICIARY:

AMOUNT:           USD xx,000,000

WE, BANKNAME, ADDRESS, HEREBY OPEN OUR UNCONDITIONAL, IRREVOCABLE, AND TRANSFERABLE LETTER OF CREDIT IN FAVOR OF xxxxxxxxxxxxxx., FOR THE AMOUNT OF USD xx,000,000 (xxx MILLIO) , DUE ONE YEAR, ONE MONTH AND ONE DAY FROM THE DATE OF ISSUE  month XX 2011, MATURITY DATE  month XX, 2012.

PAYMENT IS AVAILABLE BY THE BENEFICIARY’S FIRST WRITTEN DEMAND VIA BANK WIRE SYSTEM.  DEMAND HEREUNDER MUST BE MARKED “DRAWN UNDER LETTER OF CREDIT NO. NR-XXXXXX, DATED FEBRUARY XX, 2011.”

WE HEREBY ENGAGE WITH YOU THAT THE DRAFT DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED ON DUE PRESENTATION TO US.  THIS LETTER OF CREDIT IS SUBJECTED TO UNIFORM CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDIT I.C.C. PUBLICATION No. 600.

THIS CABLE IS AN OPERATIVE INSTRUMENT; ALL CHARGES ARE FOR THE ACCOUNT OF APPLICANT.

THIS LETTER OF CREDIT EXPIRES ON month XX, 2012.

FOR AN ON BEHALF OF:

BANK NAME, ADDRESS

Signed by 2 bank officers with ID.

Daniel Goodman 
CALL ME DIRECT 1-(972)704-1696 

www.blockedfunds.com 

BlockedFunds.com is the premiere agency for equity and debt-secured cash accounts, on a fixed-return basis, for Proof of Funds uses. We provide organizations and individuals the capability to complete long-term financing or meet other on-going project needs.

Toll Free: +1(888)625-7518
Toll Free Fax: +1(888)625-7518
Local Phone +1(214)296-9552
International +1(214)716-5018
International FAX +1(214)613-1640

Email: info@blockedfunds.com 
Skype: goodman.atoztask 
Web : www.blockedfunds.com

Why Are SWIFT Messages so commonly used?

SWIFT messages have become popular in the sugar trade due to their simplicity and efficiency. Because SWIFT messages are issued from bank to bank, there is little room for the sorts of human errors that can come into play when requesting hard copies of documentation. They are also much quicker than traditional methods of communication. A SWIFT message can be sent and received within seconds, and though they are still subject to processing time, this is much quicker than sending communications through the mail, and is much more secure.

MT760.com is one of the most innovative leasing funds business has been doing over 5 years and dealing with the top banks, HSBC, Dutch Bank, Barclay’s, Bank of America, mostly any bank in the world in every continent. We understand each transaction and work to create a win-win result for our clients. We manage over $5B in funds, and can fulfill most funding requests, in 2-14 days. We can issue swift MT202, MT799, MT760, bank gaurantees, sblcs, cash accounts for trade or credit enhancement purposes.

Daniel Goodman 
CALL ME DIRECT 1-(972)704-1696 

www.blockedfunds.com 

BlockedFunds.com is the premiere agency for equity and debt-secured cash accounts, on a fixed-return basis, for Proof of Funds uses. We provide organizations and individuals the capability to complete long-term financing or meet other on-going project needs.

Toll Free: +1(888)625-7518
Toll Free Fax: +1(888)625-7518
Local Phone +1(214)296-9552
International +1(214)716-5018
International FAX +1(214)613-1640

Email: info@blockedfunds.com 
Skype: goodman.atoztask 
Web : www.blockedfunds.com

Bank Guarantee

A bank guarantee can mitigate these risks and function as a safeguard for both parties of a transaction, providing insurance in the event that one cannot carry out the conditions established under a contract. With 100% cash-backed BG’s and relationships with only top world banks, FastBankGuarantee.com can advise and assist you in acquiring your next bank guarantee.

SWIFT MT760

An account with the SWIFT MT760 capability allows bank-to-bank SWIFT electronic verification of the account, and will include a blocked funds provision. There is no other bank guarantee provision available in the SWIFT instructions. There is a $1 million minimum account size for this SWIFT wire communication. Additional costs apply.

SWIFT MT799

An account with the SWIFT MT799 capability allows bank-to-bank SWIFT electronic verification for Proof of Funds in compliance with the SWIFT Category 7 “Treasury Markets & Syndication” message types. Often there is a misconception that a particular circumstance requires a SWIFT MT760 message, when in fact, the SWIFT MT799 format provides the required bank confirmation for the application. There is a $1 million minimum account size for a SWIFT MT799, and additional costs apply

SWIFT MT999

An account with the SWIFT MT999 capability allows bank-to-bank SWIFT electronic verification for Proof of Funds in the account, with no further comment. This SWIFT format is an appropriate message for a simple Proof of Funds communication and it is part of the Common Group of SWIFT formats providing a General Free Format for SWIFT messaging. There is a $1 million minimum account size for a SWIFT MT999, and additional costs apply.

Stand-by Letter of Credit

A Standby Letter of Credit (SBLC) is a painless form of asset enhancement, effectively increasing your investment potential. Whether conducting business domestically or internationally, An SBLC can support your transactions in a myriad of ways, allowing your company to reach its investment project goals simply and securely.

We have an extensive experience in assisting and issuing Standby Letters of Credit (SBLC). Our representatives are greatly skilled in providing SBLC consultation and can tailor this versatile financial instrument to fit your company’s current funding needs.

These types of Bank Instruments can be issued to individuals, corporations, trust, pension funds, endowments, non profit organizations, or to any payable entity. Letters of credit accomplish their purpose by substituting the credit of the bank for that of the customer, for the purpose of facilitating trade. There are basically two types: commercial and standby. The commercial letter of credit is the primary payment mechanism for a transaction, whereas the standby letter of credit is a secondary payment mechanism.

Bank Guarantee Brokers

Through our broker program, independent representatives can provide our services to their clients for new income opportunities. We provide superior service and pricing to our broker partners to help them meet their client’s financial requirements. We continuously update our program offerings to provide you new opportunities in today’s evolving marketplace. Please fill out the form below to get started in the program immediately. All client information is kept strictly confidential and brokers are protected.

Daniel Goodman
CALL ME DIRECT 1-(972)704-1696

http://www.blockedfunds.com
SWIFT BIC: MTCMUS61

BlockedFunds.com is the premiere agency for equity and debt-secured cash accounts, on a fixed-return basis, for Proof of Funds uses. We provide organizations and individuals the capability to complete long-term financing or meet other on-going project needs.

Toll Free: +1(888)625-7518
Toll Free Fax: +1(888)625-7518
Local Phone +1(214)296-9552
International +1(214)716-5018
International FAX +1(214)613-1640

Email: info@blockedfunds.com
Skype: goodman.atoztask
Web : www.blockedfunds.com

What is SBLC or Standby Letter Of Credit?

What is SBLC?

SBLC (Standby Letter of Credit)

A Commercial Letter of Credit is taken as Guarantee to be used in payment of goods and services. The Standby Letter of Credit issued is taken as guarantee that the applicant, the customer of issuing bank will execute responsibilities under an agreement. In other words, if an applicant fails to meet the promises made, the beneficiary draws on standby. According to the Controller of Currency, Standbys defined as, ‘any letter of credit or a similar document issued which mentions responsibilities to the beneficiary on the side of issuer.

The SBLC (Standby Letter of Credit) mentions details regarding-

1. To payback the money borrowed or advanced to or for the account of the account party.

2. To pay on account of an indebtedness undertaken by the account party

3. To pay in case of default by the account party in meeting of any promises made.

In the first condition, the bank which issues the SBLC agrees to pay back the money advanced or borrowed in case if applicant fails to pay. For example, a U.S. bank which offer finance to local unit of a foreign business may require SBLC payable to the bank from the foreign unit’s bank to bear the loan. In case, if local business fails to repay the loan, the U.S. bank rely on the standby to recover the unpaid loan amount.

The SBLC may also be used to guarantee the payment of invoices for sales made on open account. The purchasing party may request his bank to provide SBLC to the seller with the criterion that the Standby may be drawn on in case if outstanding bills amount are not paid within the asked time duration. If the purchasing party fails to pay on time and original invoice is unpaid, the seller has the complete authority to draw on the standby by presenting a draft, copies of the due invoices and letter with clear mention that invoices are due.

Another popular use of SBLC is to use as performance bonds or bids. The business which bid on contract to offer goods and services may be required to supply a bond or SBLC which may be drawn if business fails to fulfill the bid awards. Standby Letter of Credits are also taken is use to guarantee performance under contractual deals. For example, a builder may produce SBLC to guarantee fulfillment with government regulations and building codes. Such types of standby are termed as performance bond and may be used to make sure on time delivery of goods and services.

Both performance bond and bid standbys are payable when presented along with a request letter with mention that the applicant or buyer has failed to keep promises or make payment on time.

For more

Daniel Goodman
CALL ME DIRECT 1-(972)704-1696

www.blockedfunds.com

BlockedFunds.com is the premiere agency for equity and debt-secured cash accounts, on a fixed-return basis, for Proof of Funds uses. We provide organizations and individuals the capability to complete long-term financing or meet other on-going project needs.

Toll Free: +1(888)625-7518
Toll Free Fax: +1(888)625-7518
Local Phone +1(214)296-9552
International +1(214)716-5018
International FAX +1(214)613-1640

Email: info@blockedfunds.com
Skype: goodman.atoztask
Web : www.blockedfunds.com

How MT760 works?

Who is MT-760?

ANSWER: MT-760 is the trust funds service provider who offers full-service for timely credit enhancement such as Standby Letter of Credit Bank Guarantee. he MT-760 is a type of SWIFT message that is sometimes requested in sugar trading because it functions much like a Bank Guarantee, although it carries with it a much higher level of risk for the issuer (usually the buyer), and a reduced level of risk for the recipient (the seller). Essentially, a MT-760 is a SWIFT message which guarantees that a bank will make payment in favor of a client of another bank. When a MT-760 is issued, the issuing bank puts a hold on its client’s funds, thereby ensuring that the funds are in place to make payment to the recipient of the MT-760.

Proof Of funds Service 

Proof of Funds service is not a loan, but is a perfect, inexpensive and fast way to add strength to your current financial profile, show reserves or buy time in your transactions. The Swift terminology is MT799. Different formats may include bank letters, phone/fax verification, online account access, verification of deposit form (VOD), bank to bank Swift, Certificates of Deposit (CD’s) and/or account statements. We can arrange equity and debt-secured accounts for “Proof of Funds” uses on a fixed-return basis to facilitate various funding requirements, providing you the capability to meet on-going project needs. The investment process is simple and secure, and can be completed in as little as two (2) banking days depending on the type of account needed. We can arrange funding for various types of accounts for a broad range of requirements. All accounts are verifiable through written verification of deposit, with other confirmation options available including verbal and electronic verification. Specialty accounts are also available providing confirmations utilizing SWIFT MT999, SWIFT MT799 and SWIFT MT760 message formats. Rate-of-return requirements vary, dependent upon the amount of funds provided and the verification type needed.

MT799 service

MT 799 confirmation 

An account with the SWIFT MT799 capability allows bank-to-bank SWIFT electronic verification for Proof of Funds in compliance with the SWIFT Category 7 “Treasury Markets & Syndication” message types. Often there is a misconception that a particular circumstance requires a SWIFT MT760 message, when in fact, the SWIFT MT799 format provides the required bank confirmation for the application.

There is a $1 million minimum account size for a SWIFT MT799, and additional costs apply.

There is a $1 million minimum account size for a SWIFT MT799, and additional costs apply.

SWIFT MT 799 –  Sample MT-799 PDF

The MT-799 is a free format SWIFT message type in which a banking institution confirms that funds are in place to cover a potential trade. This can, on occasion, be used as an irrevocable undertaking, depending on the language used in the MT-799, but is not a promise to pay or any form of bank guarantee in its standard format. The function of the MT-799 is simply to assure the seller that the buyer does have the necessary funds to complete the trade.

What does the SWIFT MT-799 option provide?

An account with the SWIFT MT-799 capability allows bank-to-bank SWIFT electronic verification for Proof of Funds in compliance with the SWIFT Category 7 “Treasury Markets & Syndication” message types. Often there is a misconception that a particular circumstance requires a SWIFT MT760 message, when in fact, the SWIFT MT-799 format provides the required bank confirmation for the application. There is a $1 million minimum account size for a SWIFT MT-799, and additional costs apply.

The MT-799 is usually issued before a contract is signed and before a letter of credit or bank guarantee is issued. After the MT-799 has been received by the seller’s bank, it is then normally the responsibility of the seller’s bank to send a POP (proof of product) to the buyer’s bank, at which point the trade continues towards commencement.

The actual payment method commonly used is a documentary letter of credit or an MT-103 (wire transfer), which the seller presents to the issuing or confirming bank along with shipping documents. Once the bank confirms the documents, the seller is then paid. An alternative method is to use a bank guarantee in place of a letter of credit. It is normally at the seller’s discretion which method of payment is used.

How Do I Issue An MT-799

The short answer is that you don’t. Approach your bank, and make an arrangement with them to have an MT-799 wired to the seller’s bank. Some banks are reluctant to issue MT-799’s, as these make them liable for the full cost of the trade, which can sometimes be in the millions. A bank will normally not issue an MT-799 without some form of collateral to secure their own interests, so be prepared to put up a hefty amount of collateral.

What Does A MT-799 Look Like?

An MT-799 is an automated message sent electronically from one bank to another, so you won’t really ’see’ an MT-799 at all. The paperwork associated with an MT-799 will vary from bank to bank, though most banks follow a similar format.    

 

What Information Do I Need To Send A MT-799?

You will need the following information to send an MT-799.

• Name of the advising bank.
• LC Number.
• LC Amount.
• Tenor of Draft.
• Latest shipment date.
• Person or entity liable for confirmation fee.
• Whether the LC is restricted for negotiation or not.
• A description of the merchandise.
• Port and/or country where product will be loaded.

• Port and/or country where product will be unloaded.

Daniel Goodman 
CALL ME DIRECT 1-(972)704-1696 

www.blockedfunds.com 

BlockedFunds.com is the premiere agency for equity and debt-secured cash accounts, on a fixed-return basis, for Proof of Funds uses. We provide organizations and individuals the capability to complete long-term financing or meet other on-going project needs.

Toll Free: +1(888)625-7518
Toll Free Fax: +1(888)625-7518
Local Phone +1(214)296-9552
International +1(214)716-5018
International FAX +1(214)613-1640

Email:  info@blockedfunds.com 
Skype: goodman.atoztask 
Web : www.blockedfunds.com 

Company Profile

BlockedFunds.com is the premiere agency for equity and debt-secured cash accounts, on a fixed-return basis, for Proof of Funds uses. We provide organizations and individuals the capability to complete long-term financing or meet other on-going project needs.

BlockedFunds.com Services

• Funds seasoned for six (6) months
• Account statements provided
• Funded from a $217 billion hedge fund
• Written Verification of Deposit
• Electronic account verification option

Blockedfunds.com is the industry leader in providing short-term equity investments for Proof of Funds uses. With extensive experience in providing financial solutions for companies and individuals, we proudly offer you the advantage of dealing with a company that is known and respected in the industry for integrity and efficiency in successfully negotiating investments under the most favorable terms.

Our portfolio allows us to secure financial backing for a single project of up to $5 billion, while providing a superior level of underwriting for our partners in evaluating investment opportunities in order to insure they meet specific criteria that are suitable for the client’s needs.

Our seasoned and industry-experienced representatives are available to discuss with you the wide range of consulting services we offer. We offer personalized services tailored to your situation and are committed to securing equity investments for specialized uses that you and your company might need. Our investment resources provide the flexibility needed to accomplish and meet our client’s investment goals.

Daniel Goodman
CALL ME DIRECT 1-(972)704-1696 

Blocked Funds 

BlockedFunds.com is the premiere agency for equity and debt-secured cash accounts, on a fixed-return basis, for Proof of Funds uses. We provide organizations and individuals the capability to complete long-term financing or meet other on-going project needs.

Toll Free: +1(888)625-7518
Toll Free Fax: +1(888)625-7518
Local Phone +1(214)296-9552
International +1(214)716-5018
International FAX +1(214)613-1640

Email: info@blockedfunds.com 
Skype: goodman.atoztask 
Web : www.blockedfunds.com 

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