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What is Bank Guarantee?

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What is Bank Guarantee?

What is Bank Guarantee?

Bank Guarantee Definition

It is a declaration or assurance from a bank or a credit unit or a finance company that if a particular debtor defaults on a loan, the bank will cover the loss. Bank guarantee enables the purchaser to amplify and strengthen its business, which they would not be able to do without this. Let us make it simple by taking an example.

Step 3 Payment

Step 3 Payment

Suppose, A LMN company purchased machinery worth $2 million , the machinery vendor will demand a bank guarantee from LMN company for security purpose , that he will definitely going to receive the payment for its good shipped . For safe play, the vendor will ask for the bank guarantee from the purchaser.
LMN company will approach to the preferred lender (may be a bank, credit unit or a finance company) who will provide the bank guarantee in written that can be passed to the Vendor . The finance institution will become the co-signer on the purchaser contract with the vendor.

Now, Whom to approach for this?

This is very important to approach a genuine lender for the bank guarantee. Yield for finance is leading company which is making possible for its clients to get that bank guarantee for sure. So, don’t waste your precious time looking for any other financial institute

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