Standby letter of credit (SBLC) · Concepts · European Finance Observatory

Roles that need it

Bank guarantee (demand guarantee)A bank guarantee is a bank's undertaking to pay a beneficiary up to a set amount if the applicant fails to meet a contractual obligation. A demand guarantee pays on a compliant written demand, independently of the underlying contract. Common types are bid bonds and performance, advance payment and warranty guarantees, often subject to the ICC rules URDG 758.
Letter of credit (documentary credit)A letter of credit, also called a documentary credit, is a bank's undertaking to pay a seller a stated amount if the seller presents documents that comply with the credit's terms. It replaces the buyer's credit risk with a bank's and is usually subject to the ICC rules UCP 600. A confirmed credit adds a second bank's undertaking.
URDG 758 (Uniform Rules for Demand Guarantees)URDG 758 are the International Chamber of Commerce rules for demand guarantees and counter-guarantees, in force since July 2010. They set how guarantees are issued, amended, claimed and examined, require a demand to come with a statement of breach unless the guarantee excludes it, and give the guarantor five business days to examine a demand.

Updated 31 Oct 2026.