Difference between DLC and SBLC
Yiu Fung Finance Company Ltd is a Licensed Money Lender that was incorporated in Hong Kong on March 28, 1980 under the Money Lenders Ordinance (Chapter 163 of the laws of Hong Kong), with Registration Number: 0080313.
Our principal service is the provision of Non Recourse Loans, Project Financing, Personal Loans, Business Loans, Bank Guarantees (BG), Standby Letters of Credit (SBLC), Differed Letters of Credit (DLC) and International Project Finance for companies, SME’s and private individuals.
Today we will be talking about the Key Differences between LC and SBLC. So here you go...
Difference between DLC and SBLC
Key difference: The ‘Letter of Credit’ and the ‘StandBy Letter of Credit’ are two legal bank documents that are used by international traders. Both these letters are used to ensure the financial safety between the supplier and their buyers. And, SBLC is a type of LC that is used when there is a contingent upon the performance of the buyer and this letter is available with the seller to prove the buyer’s non-performance during the sale.
LC and SLBC are the two financial instruments that are meant to safeguard the financial interests of the international traders i.e. buyers and sellers. It simply means that both these terms are widely useful while making transaction between the two trading parties. These help in giving financial security to both the parties. Also, these contracts are produced in good faith and in both the cases the fund gets mobilized.
During a transaction, the buyer wants an assurance of receiving his product or merchandise on time, and the seller wants his security of being paid on time at the completion of the job. Here, a letter of credit is issued, for it is an assurance or a type of guarantee that the seller will receive his correct payments in time by the clients. The LC solves both the issues by bringing in the buyer's and seller's banks into the transaction.
The issuing bank of the buyer, then, opens a LC in the favor of the seller and states that seller will be paid and that he or she will not suffer any damages or losses because of the non-payment of the buyer. Though, the money transfer to the seller will only be initiated after all the conditions or documents of the contract are completed. However, the bank also safeguards the interest of the buyer by not paying the supplier until it receives a confirmation from the supplier that the goods have been shipped.
Based on this, there are two types of LCs being issued, they are:
- Documentary Letter of Credit (DLC) and
- Stand By Letter of Credit (SBLC)
Now, the DLC depends on the performance by the supplier, whereas SBLC depends on the on the non-performance or default on the part of the buyer.
A SBLC works on the same principle as a documentary letter of credit but with different objectives and required documents. The essence of SBLC is that the issuing bank will perform in the case of non performance or default by the buyer.
The purpose of this letter is to establish a bank guarantee for the deal or transaction with a third party. For example, if an individual wishes to take a loan, but does not have a sufficient credit standing, the bank may then ask for a guarantee from another party (third party), and this is done in the form of a standby letter of credit that is issued by another bank. However, the said individual would then have to produce certain documents or evidence to support the non-performance of the buyer to obtain the payment through the SBLC.
The bank is obligated to make payment if the documents presented comply with the terms of contract. Though, the SBLC are considered very versatile and can be used with modifications to suit the interests and requirements of the buyers and sellers.
Comparison between LC and SBLC:
LC and SLBC are the two financial instruments that are meant to safeguard the financial interests of the international traders i.e. buyers and sellers. It simply means that both these terms are widely useful while making transaction between the two trading parties. These help in giving financial security to both the parties. Also, these contracts are produced in good faith and in both the cases the fund gets mobilized.A SBLC works on the same principle as a documentary letter of credit but with different objectives and required documents. The essence of SBLC is that the issuing bank will perform in the case of non performance or default by the buyer.
LC
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SBLC
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| Abbreviation | It is termed as ‘Letter of Credit’. | It is termed as ‘Stand By Letter of Credit’. |
| Definition | It is defined as an assurance or a type of guarantee that the seller will receive his correct payments in time by the clients. | In case of a default, it is defined as an assurance or a type of guarantee that the seller will receive his correct payments by the bank. |
| Mode of transaction | It is the primary payment mechanism for a transaction. | It serves as a secondary payment mechanism. |
| It is | It is an instrument of payment. | It is used as a backup method to pay the financial credentials of the benefactor. |
| Expiration date | The expiration date of an LC is about one to three months. | The expiration date of an SBLC is about one year or so. |
All our Bank Instruments are Issued from Top Rated Banks such as HSBC Hong Kong, Barclays Bank London, Standard Chaterered Bank or any top rated AAA bank. These financial instruments are Cash-Backed and Stand as Obligation from our Bank on behalf of our Clients for their Credit needs, Business and Project Financing. All our Bank Instruments can be used to secure Funding for Projects, Business Expansions, Discounting, Monetization and Private Placement Programs (PPP).
WHY CHOOSE YIU FUNG FINANCE COMPANY LIMITED?
1. Number ONE: We are the leading providers of non recourse loans.
2. Easy: Issuance Of Bank Guarantees, Letter Of Credit, And DLC Within Few Days.
3. Guarantee: We offer you commercial loans with no additional collateral or guarantee.
4. More Than 10,000+ Clients from 75 countries Have Successfully Concluded Transactions With us
5. With our expertise and innovation we believe that we enrich our customers and not just make them rich.
6. Results Oriented – We have 99% success rate, so if you have a REAL deal, we will successfully close it on time.
7. Quick disbursement: Once all your documents are in place, your loan can be disbursed within few business days.
8. Most of the Work Is Done Online: so you DONT have To waste thousands of dollars on airfare and visa to come to our Office
9. Our Bank Guarantees & Letters of Credit Are Issued From Top Global Banks Such As Deutsche Bank, Citibank, Barclays, HSBC Etc.
10. Unrivaled Credibility & Authenticity – We are genuine, legally registered Money Lender with over 39 years history in the industry.
11. All Races and religions welcome: it doesn't matter whether you are Christian, Muslim, pagan, atheist, Buddhist, Taoist, Hinduism etc.
12. Complete End to End Managed Bank Guarantee Program – We provide a comprehensive, integrated & prestructured Bank Guarantee Issuing and Monetization Program. Thousands of people around the world are frantically trying to find a BG/SBLC Issuer and Funder who will work together.
13. Brokers are Protected – We value and appreciate brokers working with us and protect them from any potential circumvention. Brokers earn 2% commission on every deal they bring to us.
BROKER INQUIRIES ARE WELCOMED AND APPRECIATED: Our brokers receive 2% commission for referral. Daisy Chains of Brokers, Scammers & Time Wasters Will Not Be Entertained. We assist Clients and brokers in their attempt to secure funding by working on their funding requests that may require innovative financing.
We would welcome the chance to earn your trust and deliver you the best financial service in the industry. For more information kindly contact us via the contact us page of this website.