Global Trade Finance

An SBLC is a legal guarantee issued by a bank on behalf of a client company, fund, or portfolio company, that serves as a commitment in lieu of a cash pre-payment, surety bond, deposit or escrow account for a financial or contractual obligation. The SBLC promises payment to a beneficiary (e.g., landlord, vendor, customer, lender) if the company fails to fulfill that obligation.

An SBLC is often used in lease agreements, contract bidding processes, real estate transactions, import/export business and other scenarios where a guarantee of performance or payment is required.

SBLCs are widely accepted in both domestic and international trade and finance as a reliable form of payment or performance guarantee.

An SBLC can enable you to expand into new space while preserving working capital. Construction contracts often require payment assurances or performance guarantees. An SBLC provides that guarantee to contractors, suppliers, and other stakeholders, reducing their risk. It enables you to fulfill these contractual requirements, without having to pay cash up front, and can help avoid delays or disputes.

An SBLC also demonstrates your company's financial stability, credibility and commitment to the project. Providing this assurance may enhance your reputation with stakeholders, and help you obtain more competitive bids, facilitate smoother negotiations and secure better terms with project vendors.

Yes, an SBLC can often be used to assure the CMS of financial solvency and stability during the enrollment or revalidation processes. An SBLC can provide assurance that payment will be made even if a provider or supplier fails to meet their obligations (e.g., like a surety bond that guarantees a third party will pay if the contractual party cannot). By offering a reliable guarantee of payment, an SBLC helps foster trust and credibility with CMS, facilitating better contractual and regulatory relationships.

A CLC is typically used in trade transactions to ensure payment to suppliers. Payment is made by the bank.

A Standby Letter of Credit is more flexible and can be used in various situations beyond trade, including collateralization, escrow, bond, performance and contract guarantees and assurances. An SBLC is only paid out if the contract is not fulfilled.

Global Trade Finance may be ideal for innovation economy companies if you are…

• Looking for alternatives to paying deposits or upfront payments to secure leases or contracts
• Expanding into new countries (just getting started or scaling operations)
• Selling or buying goods overseas

Three of the most common forms of global trade finance are:

• Standby Letters of Credit: SBLC are issued by the bank on behalf of our clients to guarantee payment or performance instead of cash up front, to satisfy a lease, loan, contract bid, import/export deal and other needs.
• Import/Export Letters of Credit: help manage risk for buyers and sellers in cross-border transactions.
• Documentary Collections: coordinate the release of shipping documents with agreed upon milestones and facilitate cross-border payments.

Doing business globally can introduce a range of risks – from whether you will get paid or receive critical lab supplies, to events affecting the volatility of foreign currencies. Global Trade Finance services like Standby Letters of Credit can serve as guarantees between both parties for payment, order fulfillment and more. A SBLC can also serve as a performance bond, providing assurance to your customers when bidding on major contracts.

With SVB, you can count on fast, dedicated support from a Global Trade Finance specialist with experience working with tech and life sciences/healthcare companies. They can help end-to-end, from strategic programs for risk management and global expansion, to integrated solutions for preserving working capital such as Commercial or Standby Letters of Credit, lending and other banking services.