The Role of Trade Finance in Working CapitalStandby Facility A line of credit supplied by
a bank which is not expected to be drawn,
apart from in exceptional circumstances.
Standby Letter of Credit (SBL/C) A letter
of credit issued to ensure the financial
performance of a bank’s customer to a third-
party beneficiary and which is only drawn
upon in the event of non-performance.
Stale Bill of Lading A bill of lading that is not
available at the time of a consignment’s
delivery, thereby delaying the transfer of
ownership, or a bill of lading that is presented
after the expiry of a letter of credit.
Standard Shipping Note (SSN) A standardised
document, completed by the exporter or
freight forwarder for all non-hazardous
consignments, which principally serves
to tell the destination port how the goods
should be handled.
Step-up / Step-down A provision in a lease
contract according to which the amount of
the monthly payments increases (step-up)
or decreases (step-down) during the lease
period.
Stepped Rentals (Step Rentals) In a
structured lease, rentals can vary during the
lease period. Generally, the rental payments
increase as the lease period progresses.
Step rentals are generally used for tax
savings or cash-flow purposes.
Step-in Rights Right under a direct agreement
for the funders to take control of the
operation of a project contract.
Stipulated Loss Value A schedule in a lease
contract recording the book values of the
underlying asset during the lease term, the
amounts of depreciation, its residual value,
possible tax benefits, and the obligations
of the lessee in case of loss of or damage
to the leased property. Provides the sum
payable on early termination of a lease. Also
known as insured value or casual value.
Structured Lease A lease where the rentals
payable by the lessee are tailored to match
the cash flows generated by the assets
under lease. Can apply to seasonally used
assets, e.g. combine harvesters or charter
aircraft etc.
Sub-lease A leasing contract that transfers a
number of the lessor’s rights to another. This
does not affect the validity of the contract
between the original lessee and lessor.
Subsidised Lease A lease that is financed
via captive finance companies (or captive
finance arms) where an element of the ‘sale
profit’ can be used to subsidise the rentals
payable by the lessee.
Supplier Credit A credit extended to the
overseas buyer by the supplier. See export
buyer credit.
Supply-or-Pay Contract An agreement by
a supplier to provide a product/service at
specific intervals at a predetermined price
or, if this is impossible, to pay for alternative
provisions.
Tax Indemnity Clause A clause that is
incorporated in a tax-based lease to allow
the lessor to adjust rental payments in the
event of any changes in the tax regulations
in order to maintain the lessor’s original
anticipated return from the lease.
Tax Lease (Tax-based Lease) A lease where
the lessor benefits from tax depreciation as
owner of the assets and builds these benefits
into the rentals payable by the lessee.
Tax Variation Clause A clause inserted into a
lease to enable the lessor to vary the rentals
if there are any changes in the tax rates or
system.
Technology Refresh Option An option in a
lease agreement permitting the lessee
to upgrade the leased assets at certain
intervals of the lease period in exchange for
an increase in the original lease term and/or
amended payment conditions.
Termination Schedule The part of a leasing
contract that stipulates the value of the
leased assets throughout the leasing
period. This section is added in case
the lease allows the lessee to terminate
the leasing contract before its expiry in
order to protect the lessor from loss of
investment. It values the transfer or resale
value of the leased asset throughout the
leasing period. If the asset is sold below
the price given in the schedule, the lessee
is liable for the difference; however, if the
asset is sold at a higher price, the lessor
keeps that difference.
Termination Value A provision in a lease that
allows the lessee to terminate the lease
during the lease term if the leased asset
becomes obsolete or does no longer fit
in with the lessee’s requirements. The