Where to Apply for Standby Letters of Credit with Minimal Fees
By Taimour Zaman, Founder, AltFunds Global
Understanding SBLC Fee Structures
Finding standby letters of credit with minimal fees requires understanding the typical cost structure. For standard corporate risk, budget 1% to 3% per annum for issuance plus any confirmation¹. Top 10 Trade, Import & Export Finance Providers (August 2025). However, fees can vary significantly depending on your banking relationship and the type of institution.
The fee range extends wider than many expect. The bank will charge a service fee of 1% to 10% per year for each year the financial instrument remains valid². Letters of Credit: enabling you to mitigate risk and access finance in international trade | Solutions | HSBC. This variation creates opportunities for cost-conscious applicants to secure better terms.
Regional and Community Banks Offer Competitive Rates
Regional institutions often provide more competitive SBLC fees than major money center banks. First Citizens Bank has positioned itself as a competitive provider in this space. Ensure vendors that your payment will be made with standby letters of credit (SBLC). CFPB Sues JPMorgan Chase, Bank of America, and Wells Fargo for Allowing Fraud to Fester on Zelle | Consumer Financial Protection Bureau
Community banks typically offer lower fees because they operate with reduced overhead costs compared to global institutions. Their focus on relationship banking also creates opportunities for fee negotiation, particularly for established business customers.
KeyBank, Fifth Third Bank, and Huntington Bank represent solid regional options. These institutions strike a balance between competitive pricing and sufficient capital backing to support substantial SBLC amounts.
Credit Unions: An Overlooked Option
Business-focused credit unions can provide standby letters of credit at attractive rates. Typically offer slightly higher interest rates on deposits than brick-and-mortar banks, particularly national institutions. Tend to offer lower interest rates on loans⁴ Standby Letters of Credit—Issuance of Local Bank Guarantees
Credit unions’ member-owned structure often translates to lower fees across their commercial banking services. However, membership requirements and SBLC capacity limitations may restrict access for some applicants.
Navy Federal Credit Union and PenFed Credit Union both offer commercial banking services, though their SBLC programs require business membership eligibility.
Online and Alternative Lenders
Several fintech platforms have entered the trade finance space, although traditional banks still dominate the issuance of SBLCs. Online platforms may offer streamlined applications, but they typically cannot match the fee structures of established banking relationships.
Alternative lenders primarily focus on smaller SBLC amounts, typically under $1 million. Their higher risk tolerance may benefit applicants with limited credit histories, but fees often exceed those of traditional banks.
Negotiation Strategies for Lower Fees
Existing banking relationships provide the strongest foundation for fee negotiations. Banks value the depth of relationships and may reduce SBLC fees for customers who maintain substantial deposits or utilize multiple services.
Collateral backing can significantly reduce fees. Fully cash-secured standby letters often carry fees at the lower end of the 1-3% range, while unsecured instruments command higher rates.
Application Requirements and Timing
Most institutions require comprehensive financial documentation, including recent tax returns, financial statements, and detailed business plans. Processing typically takes 10-15 business days for new relationships, shorter for existing customers.
Credit approval standards vary significantly. Regional banks may offer more flexibility than major institutions, particularly for businesses with strong local presence or industry expertise.
Next Steps
Securing minimal fees on standby letters of credit requires comparing multiple providers and leveraging existing banking relationships. The application process demands careful preparation and strategic timing.
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Sources List
- FG Capital Advisors. (2025, August 24). Standby Letters of Credit (SBLCs): Cost, Collateral & Margin. Retrieved from https://www.fgcapitaladvisors.com/standby-letters-of-credit-what-they-cost-and-how-sponsors-can-raise-the-margin
- Corporate Finance Institute. (2023, November 21). Standby Letter of Credit (SBLC) – Overview, How It Works, Types. Retrieved from https://corporatefinanceinstitute.com/resources/commercial-lending/standby-letter-of-credit-sblc/
- First Citizens Bank. (2025). Standby Letters of Credit. Retrieved from https://www.firstcitizens.com/commercial/solutions/international-banking/standby-letters-of-credit
- NerdWallet. (2025, April 7). Credit Unions vs. Banks: How to Decide. Retrieved from https://www.nerdwallet.com/article/banking/credit-unions-vs-banks
Disclaimer Footnote
¹²³⁴This material is for informational purposes only and does not constitute investment advice, a recommendation to buy or sell securities, or a solicitation. Past performance does not guarantee future results. All investments involve risk, including potential loss of principal. Consult with qualified financial advisors before making investment decisions. This content complies with FINMA regulatory requirements for investment communications.
Compliance Disclaimer
This publication is provided strictly for educational and informational purposes. It does not constitute, and should not be construed as, an offer, solicitation, or recommendation to purchase, sell, or otherwise engage in any transaction involving standby letters of credit (SBLCs), bank guarantees, or any other financial instruments.
AltFunds Global AFG AG is neither a bank, broker-dealer, nor a licensed financial intermediary under Swiss law. All references to financial instruments, providers, or case studies are illustrative in nature and are not to be interpreted as investment advice or a guarantee of performance.
Access to certain financial products, including SBLCs, is restricted to qualified counterparties and accredited investors as defined under applicable laws and regulations. Any individual or entity considering participation must conduct independent due diligence, seek professional legal, tax, and financial advice, and ensure compliance with all relevant regulatory requirements, including those of the Swiss Financial Market Supervisory Authority (FINMA) and equivalent authorities in their jurisdiction.
Past performance, case studies, or survey data referenced in this blog are not indicative of future results. No assurance is given that any transaction or strategy described herein will be suitable or profitable for a particular investor.
By reading this publication, you acknowledge and agree that AltFunds Global AFG AG assumes no liability for losses or damages arising from reliance on the information contained herein.