Guarantees

A Guarantee is a promise of payment from the Guarantor to the Beneficiary that the Guarantor will pay the beneficiary when the beneficiary submits certain documents or makes a specific demand to the Guarantor in a certain manner time or place.

Guarantees provide comfort to the beneficiary; in case the applicant fails to meet his obligations (either financially or by performance) as per the contract made between the applicant and the beneficiary, the beneficiary will have the guarantee to turn to for payment.

Having a guarantee issued in support of a client’s transaction can help the client grow and expand their business by postponing current payments for goods and/or services to a later date, provide comfort to buyers, allow clients to bid on transaction , without requiring that Express Capital’s clients tie up their available cash.

Types of
Guarantees

A Bank Guarantee is a versatile tool which can function as a number of instruments: a bid bond, a performance bond, and advanced payment guarantee, a warranty bond, a letter of indemnity, a payment guarantee, a rental guarantee, or a confirmed payment order.

Bid bond

A bid bond is usually issued for bidders on construction or similar tender based projects. A bid bond is a debt secured by a bidder. In effect, it serves to secure the bidder’s investment in the project and to discourage bidding by less serious players. A bank guarantee could be presented as a partial alternative to the financial capital typically required by a project owner.

Perfomance bond

A performance bond, or contract bond is utilized in the real estate industry to make sure a contractor completes a designated project. A performance bond is issued by a bank, insurance company or a financial institution in favor of a beneficiary by order of an applicant, against the applicant’s failure to meet its obligations as per an underlying contract. A performance bond often covers 100% of the contract value and can replace a bid bond when the applicant has been awarded a contract. If effect, applicants use performance bonds to comfort suppliers who are concerned with the prospect that the applicant might become insolvent or otherwise unable to fulfill his contractual obligations. In case of insolvency of the applicant, the beneficiary receives compensation that should ease financial stresses or other damages caused by the contractor.

Advance payment guarantee

An advance payment guarantee, or advanced payment bond is an agreement where an issuer undertakes responsibility to return an advanced payment to the buyer, should the seller fail to meet his obligations.

Warranty bond

A warranty bond is a contract between a project/property owner, a contractor, and a surety company. The bond promises that any defects found in the original project will be repaired during the warranty period. Frequently used in the housing and construction sector, a warranty bond guarantees an investor that a contractor will resolve all covenants that relate to materials used and work done before the warranty on the materials expires.

Letter of indemnity

A letter of indemnity is an instrument guaranteeing contractual provisions will be met; otherwise financial reparations will be made. A letter of indemnity is often utilized to request replacements for lost shares from a company’s treasury.

Payment guarantee

A payment guarantee provides the supplier with financial security in case the applicant fails to pay for goods or services supplied. Payment guarantees mitigate credit or country risk when the supplier ships the goods on an open account basis, which is to say, before receiving payment. Payment guarantees are typically issued to cover debts in cases of non-payment arising under a transaction or over a period of time. The instrument’s wording is based on the terms outlined in the original debt agreement between the applicant and the beneficiary. The applicant will make a repayment based on these terms. Sometimes a payment guarantee can be backed with collateral, such as property or asset that is pre-approved by the lender.

Rental guarantees

Rental guarantees promise payment to a landlord in case a tenant defaults financially. Since the risk of a tenant defaulting can be extremely harmful to a property owner, rental guarantees are extremely valuable tools which give security to industrial and commercial landlords.

Confirmed payment

A confirmed payment order is an irrevocable obligation to pay. In most cases, the confirmed payment order is conditional on successful completion of a project.

Our Process

1

Request

Fill out and send Express Capital a request for a Guarantee using the online application.
2

Draft

Express Capital custom builds the Guarantee. The client confirms and signs the final version.
3

Due Diligence

Express Capital's client compiles several requested documents relating to its company. Express Capital scrutinizes these documents to insure the deal complies with all international regulations.
4

Issuance

Express Capital issues its client's Guarantees though the agreed-upon issuer. Express Capital monitors the Guarantee carefully to insure that it gets to the beneficiary.

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