Forfaiting Glossary

Glossary Items beginning with : S

Soft Loan

A loan made at below market rate of interest.

Standby Letter of Credit

A Letter of Credit which acts as a form of security for an advance, when a guarantee cannot be obtained, for example in the USA. They can be governed either by the UCP or by the International Standby Practices (ISP 98) a set of rules also published by the ICC and designed for use in Standby Letters of Credit only.

Straight Discount

Expresses the discount rate as a percentage discounted from the face value of a specific future cash flow or maturity. This method, while generally simpler to calculate than, for example, a discount to yield, does not represent a true interest cost.

Supplier Credit

A financing arrangement under which an entity, which may be an exporter, extends credit to its buyer.

Supply Chain Finance

Strictly a term covering a wide range of trade receivable financing techniques. It is often, however, applied to just one of those techniques, sometimes called approved payables financing, under which a buyer will arrange for its receivables to be purchased from its suppliers by a bank or other entity and will issue to that bank a separate unconditional undertaking to pay it distinct from the obligations under the invoice raised by the supplier.


Society for Worldwide Inter-Bank Financial Telecommunications.

Syndicated Loan

A facility which is provided by a group of lenders known as a syndicate. A syndicated loan agreement simplifies the borrowing process as the borrower uses one agreement covering the whole group of banks and different types of facility rather than entering into a series of separate bilateral loans, each with different terms and conditions. The most common type of agreement used is that provided by the LMA.