WHAT IS A BANK GUARANTEE? (BG)
A Bank Guarantee (BG) is very similar to a Letter Of Credit (LC) as they both are used for many types of business transactions (financial or performance based).
The real difference between the two is that a Letter Of Credit (LC) ensures that a business transaction goes as planned, whereas a Bank Guarantee (BG) reduces losses if a business transaction doesn’t go as planned.
A Bank Guarantee (BG) guarantees a certain sum to the beneficiary if the opposing party doesn’t fulfill its specific obligations under their agreed upon contract.
Bank Guarantees (BG) ensure both sides in a contractual agreement from credit risk.
A construction company and its steel beam supplier may enter into a contractual agreement to build a new complex.
Both sides might have to issue Bank Guarantees (BG) in order to prove their credit-worthiness to each other.
In a case that the steel beam supplier fails to deliver steel beams to the job site per their agreed contractual agreement, the construction company would notify the issuing bank of the breach of terms agreed up in the Bank Guarantee (BG) and the bank would then pay the construction company the amount agreed upon in the Bank Guarantee (BG).
HOW DOES THE BANK GUARANTEE (BG) PROCESS WORK?
Bank Guarantee Closing Process
Step 1: Application
Fill out and return the Bank Guarantee (BG) application with the documents for your deal. (Contract, Agreement, etc.) to the bank guarantee lender.
Step 2: Issuing of Draft
A SWIFT MT760 draft of the Bank Guarantee (BG) will be created for you and your beneficiary to review.
Step 3: Draft Review and Opening Payment
a) Finalize the draft between you and your beneficiary and sign off on the draft (changes are free of cost).
b) We issue you a payment invoice for the BG, which you arrange to pay.
c) Once we receive your wire payment, we will release the finalized Bank Guarantee (BG) to the bank for issuance and delivery.
Step 4: Issuance
More often than not, the bank will issue the Bank Guarantee (BG) within 48 hours of release.
Once issued, a copy of the BG will be emailed to you as it is transmitted by a MT760 SWIFT message to the beneficiary, including the reference number of the BG.
Your seller’s bank will be able to receive and confirm the Bank Guarantee (BG) transmission soon thereafter from the bank guarantee lenders offer department.
WHAT ARE TYPES OF BANK GUARANTEES? (BG)
1. Bid Bond Guarantee:
Is issued as part of the bidding process between a contractor and the project owner, in order to guarantee that the winning bidder will undertake the contract under the term sand conditions that they bid.
2. Performance Bond Guarantee:
A surety bond usually issued by a bank to guarantee the satisfactory completion of a project by a contractor.
Also known as a contract bond.
3. Advance Payment Guarantee:
Is utilized whenever a contract includes advance payment to be made to the seller.
It guarantees that this advance payment will be returned to the buyer if the seller happens to not fulfill its obligation to the seller.
4. Warranty Bond Guarantee:
A type of security bond that states that the contractor has a history of trustworthiness.
It also protects the client should the work completed be subpar or unethical in any way.
5. Payment Guarantee:
A financial commitment that requires a debtor to make a repayment due to terms outlined in the debt agreement.
6. Rental Guarantee:
A type of insurance used to protect landlords against loss of rent.
7. Letter of Indemnity:
A letter that guarantees certain contractual provisions will be met or financial reparations will be made.
Guarantees that losses will not be suffered if the contractual provisions aren’t met.
8. Confirmed Payment Order Guarantee:
A guarantee of payment on a certain due date on top of the letter of credit issuing bank’s own commitment to pay the supplier.
Whats The Process
We are currently offering a Non-Recourse Loan against a Bank Guarantee (BG/SBLC) as collateral with our Monetization Program. The Program allows you to generate Investments Funds which can be used for trade finance, constructions, credit enhancement, government funding, property investment and all round range of funding. We can provide 100% LTV Non-recourse loan with our BG Leased Monetization Program. Find below Our Transactional Procedures and Bank Transmission charges for the Delivery of our Cash Loan from our financial institution.
The Lender shall carry our Financial, Corporate and Due diligence investigations on the Borrower’s company after the successful investigation and confirmation of the authenticity Borrower’s company/ identification by our legal department, the Lender and Borrower execute, sign and initiate this Deed of Agreement, which thereby automatically becomes a full commercial recourse contract to be lodge by both parties initiation of Swift Transmission.
Within Three (3) Banking Days after the Legal department has successful verified the authenticity of the Borrower’s document, Our financial department shall send a copy of Letter Of Intent to Complete, Sign and Stamp.
Within Two (2) Banking Days after the financial department has received and Confirm the Borrower’s sign and stamp Letter of Intent, Lender will issue a copy of Signed Contract to the Borrower to Complete and stamp then send back Countersigned to the Borrower to complete contract.
Within One (1) Banking day after the Lender receives from the Borrower, the Countersigned Contract, The Lender will send a copy of Advance payment guarantee APG or payment refund guarantee PRG that will be duly be signed and stamped by the lender’s bank which guarantees that any delay or default from the Lender side, on Borrower’s first request to our bank any payment made in advance will be refunded along with 1% penalty fees and the signed and seal Payment Invoice. The Borrower will make only 50% payment of the Bank Transmission, Administrative & Handling charges for the Non-Recourse Loan via Swift MT103 by direct wire transfer into the Lender’s provided Banking .
Within Three (3) banking days after confirmation of receipt of payment for 50% of the Bank Transmission, Administrative & Handling charges for the Non-Recourse Loan via Swift MT103 in Lender’s nominated bank account, the Lender will deliver Non-Recourse Loan (Cash Loan) via Swift MT103 to the Borrower’s Provided Bank Account.
Borrower sends out leasing fees 5% LTV per annul by Swift MT103 to the Lender’s nominated Bank account with the initially 50% balance of Bank Transmission, Administrative & Handling charges by wire transfer within Five (5) Banking days upon delivery and confirmation of the Non-Recourse Loan via Swift MT103 in the Borrower’s nominated Bank account
Any unauthorized calls by any party or its representative lawyers to probes or communication in an improper way to bank(s) in this transaction shall be prohibited and contract terminated
The 5% LTV will only be paid for 10 years and after which the Loan becomes Non-Recourse. NOTE: You are only to pay in advance 50% of the required processing fees in order to complete and successfully acquire the loan from our financial institution.
Why you Should Choose us?
1). Guarantee: We guarantee the ultimate successful Funding of your Projects. In the case of fail, we return 100% of the swift Fee Paid with 1% penalty fee.
2). Speed: It takes up to 5-10 business days to fund your Project.
3). Reliability: Trust is important for us. We fund entrepreneurs to run their businesses successfully already since 2012.
4). Experience: Our experienced professionals will consult you about all the steps that should be done after contacting our Legal Department. We have developed and time-tested approaches for all the operations.
5). No risk: The Advance payment guarantee APG or payment refund guarantee PRG will be duly signed and stamped by the Lender’s bank which means the Fee is 100% secured, we are helping our clients get funded with minimum cost.
6). Insurance: Set up insurance right for you and your business and We help client insure their projects, even if their projects fails they have no worries as the insurance company covers the Loss.