SBLC vs LC: what is the difference?
By the Vanguard Verify desk · Published 2026-10-23 · Updated 2026-10-25
Short answer: a documentary letter of credit (LC) is the normal way to pay: the bank pays the seller when compliant shipping documents are presented. A standby letter of credit (SBLC) is a safety net: the bank pays only if the buyer fails to pay or perform.
| LC (MT700) | SBLC (MT760) | |
|---|---|---|
| Role | Primary payment | Backup / guarantee |
| Paid when | Seller presents compliant documents | Beneficiary shows the applicant defaulted |
| Usual rules | UCP 600 | ISP98 or UCP 600 |
Which should I use?
- Bulk cargoes (sugar, cement, edible oils) are often paid by irrevocable LC at sight.
- An SBLC suits repeat or open-account trade where the seller wants security.
Both cost bank charges to open, so verify the other side before opening either. The buyer shows proof of funds; the seller shows proof of product.
Check your counterparty with Vanguard Verify — first check free.
Type the company name. We show its public registry record (Global LEI Index), free.
Public registry data. By searching you accept our Terms.
FAQ
Is an SBLC safer than an LC?
Neither is automatically safer. An LC is the payment itself; an SBLC is security that pays only on default. Safety depends on the issuing bank and on checking the counterparty.
Vanguard Verify is run by Vanguard Trade Capital Goods Wholesalers DWC-LLC, Dubai South, Licence 14282. This answer is general information, not legal or financial advice.