A bank issues a standby letter of credit on behalf of a customer. With standby letters of credit, Bank SNB agrees to pay a specified sum of money to a third party upon presenting required documents that show our customer has defaulted or failed to perform under a contract or agreement. This financial arrangement allows you to establish credit with a third party and saves you cash for working capital. Credit is issued as a backup and is not intended to be drawn upon.
A commercial letter of credit can be issued to a vendor to purchase goods or services or for international transactions. Bank SNB guarantees a specified sum of money to a third party upon presenting required documents, helping you gain credibility with a new vendor.
Talk with a commercial banker in your area to explore how letters of credit can help your business.