Bank Guarantee vs SBLC – Which is Better?

Bank Guarantee (BG) vs Standby Letter of credit (SLOC SBLC) – Which is Better?

Today we want to know whether a bank guarantee is better than a Standby letter of credit. But first of all we will need to understand what is bank guarantee and what is a standby letter of credit.

BG Bank Guarantee Meaning- Kingrise Finance Limited
Bank Guarantee Provider

What is Bank Guarantee (BG) Meaning?

A bank guarantee is a promise from a bank or a financial institution that if a particular borrower defaults on a loan, the bank will cover the loss.

The bank guarantee signifies a lending institution ensures that the liabilities of a debtor is going to be met. In other words, if the debtor is unsuccessful to settle a debt, the bank will cover it. A bank guarantee allows the customer, or debtor, to acquire goods, purchase equipment or draw down a loan.  

A bank guarantee acts similarly to a line of credit, except that a line of credit can be drawn upon at will by the bank’s client. A bank guarantee is used only if the client does not pay its vendor an agreed-upon amount. U.S. credit institutions are forbidden from assuming guarantee obligations, and therefore most international transactions require a standby letter of credit. 

Types and Examples of Bank Guarantees

There are many different kinds of Bank Guarantee namely:

  • A Payment Guarantee assures a seller the purchase price is paid on a set date.
  • An Advance Payment Guarantee acts as collateral for reimbursing advance payment from the buyer if the seller does not supply the specified goods per the contract.
  • A Performance Bond serves as collateral for the buyer’s costs incurred if services or goods are not provided as agreed in the contract.
  • A credit security bond serves as collateral for repaying a loan.
bank guarantee provider
bg bank guarantee meaning

What is Standby Letter of Credit (SBLC/SLOC)?

A standby letter of credit (SBLC / SLOC) is a guarantee of payment by a bank on behalf of their client. It is a loan of last resort in which the bank fulfills payment obligations by the end of the contract if their client cannot.
A standby letter of credit can also be abbreviated SBLC or SLOC. A standby letter of credit is different from a bank guarantee.

Types and Examples of Standby Letter of Credit (SBLC/SLOC)

Financial standby LOC: An exporter sells goods to a foreign buyer, who promises to pay within 60 days. If the payment never arrives (and the exporter required the buyer to use a standby letter of credit) the exporter can collect payment from the importer’s bank. Before issuing the letter of credit, the bank typically evaluates the importer’s credit and determines that the importer will repay the bank. But if the customer’s credit is in question, banks may require collateral (or funds on deposit) for approval.

Performance standby LOC: A contractor agrees to complete a construction project within a certain timeframe. When the deadline arrives, the project is not complete. With a standby letter of credit in place, the contractor’s customer can demand payment from the contractor’s bank. That payment functions as a penalty to encourage on-time completion, funding to bring in another contractor to take over mid-project, or compensation for the headaches of dealing with problems. This is an example of a “performance standby letter of credit, and a failure to perform triggers the payment. 

Types and Examples of Standby Letter of Credit (SBLC/SLOC)
sblc/sloc types- Kingrise Finance Limited

Advantages of a Standby Letter of Credit (SBLC / SLOC)

An SBLC helps ensure that the buyer will receive the goods or service that’s outlined in the document. For example, if a contract calls for the construction of a building and the builder fails to deliver, the client presents the SLOC to the bank to be made whole. Another advantage when involved in global trade, a buyer has an increased certainty that the goods will be delivered from the seller.

Also, small businesses can have difficulty competing against bigger and better-known rivals. An SBLC can add credibility to its bid for a project and can often times help avoid an upfront payment to the seller.

The SBLC / SLOC is often seen in contracts involving international trade, which tend to involve a large commitment of money and have added risks.

Bank Guarantee and SBLC (Standby Letter of Credit) are both financial instruments but as you can see from the above definitions, each of them has a very different financial purpose. Most banks can issue either a Standby letter of credit or Bank Guarantee so from time to time our clients often ask us which is better.

If your aim or plan is to have your Bank Guarantee or SBLC monetized, discounted or funded so you receive the most amount of cash from the instrument as possible…. Then a BANK GUARANTEE will be BETTER! But if your aim is to get a loan or credit from a bank then SBLC will be BETTER for to secure loan from your bank.

In bank instrument monetization, funders who monetize Bank Guarantees and SBLC (Standby Letter of Credit) prefer Bank Guarantees and generally pay MORE for Bank Guarantees than they do for SBLC’s. Also, Loan to Value (LTV) ratio on Bank Guarantee tend to be higher than SBLC so if your aim is to maximize the monetized return from your financial instrument, then apply for a Bank Guarantee.

What is BG SBLC funding and how do you monetize bg bank guarantee or sblc?

BG SBLC funding or sblc financing is the process of using bg sblc to obtain loan or funding from a bank. BG/SBLC funding can also be described as the process of converting bg sblc into cash.


BG SBLC Monetization or monetisation is the process of converting a bg/sblc into money or legal tender.

monetize bank instruments


The Easiest and Best Way To Obtain a bank Guarantee (bg) and standby letter of credit (SBLC / SLOC) Is Through Kingrise Finance Limited because our bg/sblc issuance and monetization process is simple, fast and efficient and we offer the best rates as well as the best LTV in the industry.

Kingrise Finance Limited is a direct provider of Standby Letter of Credit (SBLC/SLOC) and Bank Guarantee (BG). We also provide Business Loans, SME Loans, Project Financing, recourse Loans, Non Recourse Loans, Letter of Credit, Standby Letter of Credit Funding, Lease Bank Guarantee, Performance Guarantee Bond, Tender Bond Guarantee, Advance Payment Guarantee, Bank Comfort Letter, sblc bg funding, lease sblc, lease bank instruments, sblc bg provider.  

Our bank instruments, bg and sblc/sloc are issued from prime banks such as Barclays Bank London, Standard Chattered Bank, HSBC Hong Kong or any rated AAA bank of your choice. All our financial instruments are Cash-Backed and can be used as collateral to secure funding for projects, Discounting, Monetization and Private Placement Programs (PPP)..

BG/SBLC Description:

1. Bank Instrument Type: Cash Backed Bank Guarantee {BG} / Standby letter of Credit (SBLC)
2. Face Value: USD/EUR 1Million (Minimum) to USD/EUR 50 Billion (Maximum)
3. Issuing Bank: Barclays Bank London, HSBC Hong Kong, Citibank New York, Deutsch Bank Germany or any prime bank.
4. Age: One Year and One Day (with rolls and extensions where applicable)
5. Leasing Price: 4% of Face Value plus 2% brokers commission (Applicable only if there are brokers in the transaction)
6. Delivery: SWIFT MT-760
7. Payment: MT103 Swift Wire Transfer
8. Hard Copy: Bank Bonded Courier within 7 banking days.

   Why Choose Us?

  • Fast Turnaround
  • Best Top Rated Banks
  • Competitive Low rates
  • No prepayment penalty
  • 2 Days for Commitment
  • Extremely Satisfied Clients
  • 20 Years of Experience & Trust
  • No Personal Collateral Required
  • Solutions for every customer & every industry.
  • Loan amounts from $1 million to over $500 million
  • Fast Approvals & Fast Funding- Closing in as little as 5 days

BROKERS: We welcome new brokers who are direct to their client. New brokers are welcomed and are rewarded with 2% commission on every deal they bring to us. 

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