Common Uses of BG and SBLC in Global Business

Bank Guarantees and SBLCs are versatile instruments used in various sectors including construction, manufacturing, leasing, import/export, and services. A Performance Guarantee ensures timely completion of contracts. A Bid Bond (a type of BG) assures tender commitments. SBLCs, frequently used in commodity trade, protect sellers against buyer default. Leasing companies may request SBLCs as rental security. BG/SBLCs are also used in financial agreements, providing fallback assurance in loans or investments. By backing obligations with bank support, these tools facilitate cross-border business, mitigate payment risks, and build trust between unfamiliar parties operating in different legal systems.