Making Your Future a Success

 A bank guarantee is a kind of guarantee from a lending  organization. The bank guarantee signifies that the lending institution  ensures that the liabilities of a debtor are going to be met. In other  words, if the debtor fails to perform the obligation, 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 is a  promise from a bank or other lending institution that if a particular  borrower defaults, the bank will cover the loss. A bank guarantee is  similar to but not the same as a letter of credit. 

 A Standby Letter of Credit (SBLC) is a legal document that  guarantees a bank's commitment of payment to a seller in the event that  the buyer or the bank's client–defaults on the agreement. A standby  letter of credit helps facilitate international trade between companies  that don't know each other and have different laws and regulations.  Although the buyer is certain to receive the goods and the seller  certain to receive payment, a SBLC doesn't guarantee the buyer will be  happy with the goods. 

 Loan/Credit against a  bank instrument (BG/SBLC) means raising  finance (or credit line) against it. In order to raise a credit line  against a bank instrument, it is important that the bank instrument is  worded specifically for the purpose of securing a credit line. Raising a  credit line against a bank instrument issued for other purposes, may  not be possible