While a Usance LC provides a credit period for payment, a Standby Letter of Credit (SBLC) is primarily a payment guarantee instrument. SBLCs are commonly used when the buyer fails to meet their payment or performance obligations. Unlike an SBLC, a Usance LC is more focused on credit terms, allowing the buyer a specified time to make the payment.
In the context of trade finance services, a Usance LC is particularly useful when the buyer requires additional time to sell the goods or generate revenue before settling the payment. On the other hand, an SBLC is utilized more as a security measure, assuring the seller of payment if the buyer defaults.
Tags: Letter of Credit,trade finance services,
