The instrument itself, be that a Bank Guarantee or a Standby Letter of Credit, is not as important as the CONTRACTUAL wording of the financial instrument, and the applicable UCP Rules governing the instrument.
Generally Standby Letters of Credit, or commercial SBLCs are the cheaper and more normal payment guarantee over Bank Guarantees. Furthermore, looking at the processes of OBTAINING BGs versus SBLCs (issuance protocols and document examination- fees, time and expertise spent) and risk COVERED, LCs are the more popular means of payment in trade finance.

BG and SBLCs are triggered out of DEFAULT (a breach of any kind under any type of contract- financial, payment, tender/bid, insurance, and MANY other forms of contract). LCs, we all know, cover performance.

The instrument itself, be that a Bank Guarantee or a Standby Letter of Credit, is not as important as the contractual wording of the financial instrument, and the applicable UCP Rules governing the instrument.
Generally Standby Letters of Credit, or commercial SBLCs are the cheaper and more normal payment guarantee over Bank Guarantees. Furthermore, looking at the processes of obtaining BGs versus SBLCs (issuance protocols and document examination- fees, time and expertise spent) and risk covered, LCs are the more popular means of payment in trade finance.

BG and SBLCs are triggered out of default (a breach of any kind under any type of contract- financial, payment, tender/bid, insurance, and many other forms of contract). LCs, we all know, cover performance.