Short answer
Trade finance involves two sets of documents. To issue a letter of credit, SBLC or guarantee, the bank needs company and KYC documents, financial statements and the underlying contract or proforma. To be paid under a letter of credit, the beneficiary presents the documents the credit requires: typically a commercial invoice, a bill of lading or other transport document, a packing list, a certificate of origin and any stipulated certificates.
Key points
- Onboarding (KYC) requires identifying the company, its beneficial owners and its authorised signatories.
- Financial statements and the underlying contract support the bank’s credit decision.
- Under UCP 600, banks examine documents on their face, not the goods (articles 5 and 14).
- Transport documents must normally be presented within 21 calendar days after shipment, and in any case before expiry (UCP 600 article 14(c)).
- The description of goods on the commercial invoice must correspond with the description in the credit (article 18(c)).
- Under an SBLC or demand guarantee, the beneficiary usually presents a demand and a statement, not shipping documents.
Why do banks ask for so many documents?
Documents appear at two different moments. Before issuance, the bank needs to know who you are and whether it can take the risk of paying on your behalf: that is onboarding (KYC) and credit approval. After issuance, under a documentary credit, payment depends entirely on the documents presented by the beneficiary. Under UCP 600, banks deal with documents and not with the goods or services they relate to.
A complete file at the start is the most reliable way to save time. Our guide on how long it takes to get an LC or SBLC shows where missing documents usually cause delays.
What company and KYC documents are usually requested?
Requirements vary by bank and country, but a company applicant should expect to provide most of the following:
- Certificate of incorporation or a recent extract from the commercial register.
- Articles of association (by-laws) and any amendments.
- List of directors and the shareholder register, with an ownership chart down to the beneficial owners, meaning the natural persons who ultimately own or control the company.
- Identity documents and proof of address for directors, beneficial owners and authorised signatories.
- Board resolution or power of attorney authorising the transaction and the signatories.
- Tax identification number and, where held, a Legal Entity Identifier (LEI), which some institutions request.
- Business description: activity, main products, countries of operation, main customers and suppliers.
- Licences relevant to the trade (import or export licences, sector permits).
- Information on the source of funds for any cash collateral.
These checks come from anti-money-laundering standards that banks must apply to every new client. A bank statement or a bank reference letter is also how a company legitimately evidences funds; see our guide to proof of funds.
What financial information supports the credit decision?
- Recent annual accounts, audited where the company is required to have them audited, usually for more than one year.
- Interim or management accounts for the current year.
- Recent bank statements.
- A list of existing bank facilities and debts, with any security already granted.
- A short cash-flow view of the transaction: how the goods will be paid for, sold and the bank reimbursed.
- Documents on the collateral offered, if any (deposit, securities, other assets).
A recently formed company with little financial history is not excluded, but it should expect the bank to ask for more security.
What transaction documents support the application?
- The underlying contract or a proforma invoice: goods or services, quantity, price, currency, payment terms, shipment window, ports or places of delivery.
- The Incoterms® 2020 rule agreed (for example FCA, FOB, CIF, CIP or DAP), which determines who arranges transport and insurance and therefore which documents the credit should call for.
- Counterparty details: full legal name, address, country and bank of the beneficiary.
- The draft terms: the proposed LC conditions, or the guarantee or standby wording the beneficiary requires.
- For project guarantees (bid, performance, advance payment): tender documents, award letter and the contract clauses that set the guarantee amount and validity. See our bank guarantee guide.
Example (illustrative): a buyer agrees CIP terms. Under CIP the seller must insure the goods, so the credit will normally require an insurance document from the seller. Under FCA or FOB, insurance is the buyer’s concern and the credit should not ask the seller for it.
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Discuss your transactionWhich documents are presented under a letter of credit?
The credit lists exactly what must be presented. The most common documents are:
| Document | What it evidences | Key UCP 600 points |
|---|---|---|
| Commercial invoice | The sale: goods, quantity, price, terms | Issued by the beneficiary, made out in the name of the applicant, in the currency of the credit; need not be signed; the goods description must correspond with the credit (art. 18) |
| Bill of lading (B/L) | Shipment by sea, receipt of goods by the carrier, and, as a document of title, control of the goods | Indicates the carrier, is signed as required, shows goods shipped on board at the named port of loading (art. 20) |
| Other transport documents | Sea waybill, multimodal document, air waybill, road, rail or courier receipt | Each has its own article (art. 19 and 21 to 25) |
| Insurance document | Cover on the goods in transit | Issued and signed by an insurer or its agent; cover notes not accepted; at least 110% of the CIF or CIP value if the credit is silent (art. 28) |
| Packing list, weight list | Contents and packing of each package | Accepted as presented if it fulfils its function and does not conflict with other documents (art. 14(f)) |
| Certificate of origin | Where the goods were produced | Issued by the party named in the credit, if any (art. 14(f)) |
| Inspection or quality certificate | Quality, quantity or condition checked by an inspector | The issuer and content should be specified in the credit |
| Draft (bill of exchange) | The demand for payment or acceptance | Required only if the credit says so; a credit must not be available by a draft drawn on the applicant (art. 6(c)) |
Sanitary, phytosanitary or other certificates may be added depending on the goods and the importing country.
How do you avoid discrepancies?
- Read the credit as soon as it is advised and request any amendment before shipping, not after.
- Keep data consistent: data in one document need not be identical to another, but must not conflict (UCP 600 art. 14(d)).
- Respect the deadlines: present within the period stated in the credit or, if none, no later than 21 calendar days after shipment, and always before expiry.
- Provide originals where the credit requires them; at least one original of each stipulated document must be presented (art. 17).
- Match the goods description on the invoice to the credit; other documents may describe the goods in general terms that do not conflict.
- Check practice: ISBP 821, the ICC’s International Standard Banking Practice, explains how banks examine each document. See our guide to ICC rules.
If documents are discrepant, the bank may refuse them or ask the applicant whether it waives the discrepancies. Payment is delayed and fees usually apply.
What is presented under an SBLC or demand guarantee?
A standby letter of credit or a demand guarantee is meant to be used only if something goes wrong. The beneficiary therefore usually presents a written demand, often with a statement that the applicant has failed to perform or pay, plus any other document the instrument requires (for example, a copy of the unpaid invoice). Under URDG 758, a demand must be supported by a statement indicating in what respect the applicant is in breach, unless the guarantee excludes that requirement (article 15).
How Star Alliance helps
Star Alliance reviews your transaction, helps you assemble a complete and consistent file, prepares the proposed wording and coordinates with the parties and the issuing institutions. We can also review the documents a credit will require before you ship. The issuing institution makes its own KYC and credit decisions. Send us your transaction to start.
Frequently asked questions
Which documents does a bank need to open a letter of credit?
Usually company and KYC documents (registration, articles, ownership and beneficial owners, IDs of signatories), recent financial statements, and the underlying contract or proforma invoice with the proposed credit terms. Exact requirements vary by bank and country.
What are the usual shipping documents under an LC?
Commonly a commercial invoice, a transport document such as a bill of lading or air waybill, a packing list and a certificate of origin. Depending on the Incoterms® rule and the goods, an insurance document, an inspection certificate or sanitary certificates may also be required.
How long does the exporter have to present documents?
Within the period stated in the credit. If none is stated, UCP 600 requires presentation of original transport documents no later than 21 calendar days after shipment, and in any event no later than the expiry date of the credit.
Does the bank check the goods?
No. Under UCP 600, banks examine the documents only, to determine whether they appear on their face to comply with the credit. This is why inspection certificates from an independent inspector are often required.
Do I need an LEI to obtain a letter of credit?
Not always. Some institutions ask for a Legal Entity Identifier as part of onboarding, and it helps counterparties verify a company. It can be looked up in the public GLEIF database.
Sources
Star Alliance Consulting editorial team · Updated 31 October 2026