Standby letter of credit (L/C)

Standby letter of credit (L/C),

Definition of Standby letter of credit (L/C):

1. A letter of credit that is used mainly in the US where banks are legally barred from issuing certain types of guaranties. It serves as a parallel (collateral) payment source in case the primary source fails to meet its obligations in part or in full and is a substitute for a performance bond or payment guaranty. Also called standby credit.

How to use Standby letter of credit (L/C) in a sentence?

1. You may want to ask for a standby letter of credit so that you have proof of the deal that has taken place.
2. My credit score was not enough to finance my new house, so I received a standby letter of credit from my bank which was co-insured by my grandma.
3. The standby letter of credit was sufficient for our business partner to be willing to proceed in undertaking the project.