Understanding the Basics of BG and SBLC in International Trade

Bank Guarantees (BG) and Standby Letters of Credit (SBLC) are essential financial instruments used in global trade to assure payment and reduce transaction risk. A BG is a promise from a bank to cover losses if a party defaults, while an SBLC is a secondary payment method that activates upon non-performance. Businesses use them to build trust with foreign partners, ensuring contracts are honored. These instruments can secure loans, leases, or business deals, offering peace of mind to both parties. Understanding their distinct purposes and legal frameworks is key to leveraging them effectively in international finance.