Also known as an automatic extension letter of credit. A letter of credit that extends automatically at the end of its term. In most cases evergreen letters of credit are standby letters of credit, which commonly have an initial term of one year. The duration of an evergreen letter of credit extends automatically at the end of its initial one-year term, and at the end of any extended term, by one more year. The applicant does not need to request an extension each time and the extension occurs automatically unless the issuing bank notifies the applicant that it will not extend the letter of credit, which it can do once each year. The issuing bank usually must give the applicant 30 days' notice of its decision not to extend.

Evergreen letters of credit are typically used in commercial real estate transactions to secure outstanding obligations of a party, such as:

For more information on evergreen letters of credit, see Standard Clauses, Loan Agreement: Letters of Credit Clauses: Drafting Note: Evergreen Letters of Credit.