Compare · Side by side
SBLC vs Demand Guarantee
Both are independent undertakings and can be transmitted using MT760, but market practice and common rulebooks differ.
| Question | SBLC | Demand Guarantee |
|---|---|---|
| Typical purpose | Backup/direct-pay support for financial or performance obligations. | Performance, advance payment, bid, payment and other guarantee obligations. |
| Common rulebook | ISP98; sometimes UCP if incorporated. | URDG 758 when incorporated. |
| SWIFT issuance | MT760 can be used. | MT760 can be used. |
| Instrument identity | Form/wording identifies a standby. | Form/wording identifies a demand guarantee. |
| Demand | According to standby terms and applicable rules. | According to guarantee terms and applicable rules. |
| Underlying contract | Independent from underlying relationship. | Independent from underlying relationship in a demand-guarantee structure. |
| Same thing? | No. Similar function, different legal/market traditions. | No. Do not assume every MT760 is an SBLC. |
How to use this comparison
The labels are a starting point, not a substitute for the actual wording. Before choosing a structure, ask what creates the payment obligation, who carries the credit risk, what rules apply, what event triggers payment and whether the receiving bank or financier accepts the structure.
1. Obligation
Who actually promises or is ordered to pay?
Who actually promises or is ordered to pay?
2. Trigger
What must happen before payment is due?
What must happen before payment is due?
3. Rules & documents
What wording or documentary conditions control the result?
What wording or documentary conditions control the result?
4. Bank acceptance
Will the relevant bank accept, advise, confirm, finance or process it?
Will the relevant bank accept, advise, confirm, finance or process it?
Key lessonMT760 is a message family. It does not erase the difference between a standby and demand guarantee.