Business Letters of Credit
A Standby Letter of Credit (SLOC) is a guarantee of payment by a bank on behalf of their customer (you). It is considered a loan of last resort in which the bank fulfills payment on a contract to an interested third party (usually a vendor or client to you, the customer).
Similar to holding funds in escrow, this Letter of Credit protects all parties engaged through the issuance of a line of credit that may be drawn against in the event funding is required. Because of the irrevocable commitment to lend, this type of credit generally requires strong financial backing and collateral.