Stand-by Letter of Credit (SLC)

A financial guarantee or performance bond issued by a bank on behalf of a customer. They are created as a sign of good faith in business transactions, and are proof of a buyer's credit quality and repayment abilities.

Standby letters of credit are often used in international trade transactions, such as the purchase of goods from another country. It will typically be in force for about one year, allowing for enough time for payment to be made through standard contractual guidelines.