Bank Guarantees and Surety Bonds are the financial instruments that are used to ensure protection to the parties; who involved in the supply of goods or construction projects. These instruments assure the parties that, if any default occurs, then the banks will be liable to pay as per the contract terms. Overall, these MT760s are used to provide the required assurance. But, there are some major differences between Bank Guarantee vs Surety Bond.
What is a Bank Guarantee?
Bank Guarantee is a written undertaking issued by banks on behalf of their clients to ensure that they will meet their financial terms without fail. Further, with this promise, the banks undertake that they will pay the specific amount if the terms stated in the contract are not been met.
Since the banks analyze and certify the fiscal stability of the buyer, their credit worth increases. Also, this, in turn, increases business opportunities. Hence, this allows traders to conclude trade deals with big companies, which they can’t able to do without having a Letter of Guarantee.
Getting BG MT760 from your bank account is not an easy task if you have a low credit score. Further, with the strict norms of banks, it is very difficult to obtain a BG MT760. On the other hand, for guarantees involving bulk goods or million worth of projects, banks will require collateral as security to process the guarantee. Are you facing a lack of cash funds to arrange a Guarantee Letter? You can contact us today!
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What is Surety Bonds?
Surety Bonds or Performance Bonds is a contract between three parties, i.e. the Principal (the project owner or the buyer), the Bank, and the obligee (the seller or the contractor). Further, the banks act as a guarantor to the obligee that they will fulfill the terms of the contract without fail.
These surety bonds are mostly used in construction contracts. This is to assure that in case if the contractor fails to perform the task; then the project owner has a right to claim the bond to recover their losses incurred in the project. Also, it states that, if the claims are valid, they will receive the reimbursement of the amount stated in the contract.
To issue the Performance Bond on your behalf, banks will ask you to block a certain percent of the bond value as collateral. And so, in case of non compliance with the banking norms, your request will be declined by the bank. So, if you’re looking to get surety bonds without straining your cash funds, you can contact us with your bonds requirement. Surely, our team can help you to find the right solution that suits your business and your project. Contact us today to get started.
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Difference: Bank Guarantee vs Surety Bond
- Bank Guarantees serve as a payment assurance given by the buyer to their sellers. On the other hand, surety bonds assure performance on a specific project or trade deal.
- BG MT760 assures that the buyer will make the payment if the seller fulfills the contract terms without fail. Whereas, Performance Bond assures that the buyer can claim the bond to get the reimbursement; in case of non fulfillment of obligation by the seller as stated in the contract.
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How to Get BG MT760s
Whether you are in need of Bank Guarantees or Surety Bonds to conclude your trade deals or projects; then, you can always rely on us! Bronze Wing Trading L.L.C., the BG Providers & Performance Bond Providers in Dubai have worked with thousands of contractors and traders to provide the best solution for their bond requirements!
To get Bank Guarantees & Surety Bonds from good repute banks without blocking your working capital, contact us now!
