21 Aug How To Find Genuine Bank Guarantee (BG) Providers
How Do You Know If Your Bank Instrument Provider (Bank Guarantee / Standby Letters of Credit) Is Real Or Not?
This Is Instructional Guide On How To Find Genuine Bank Guarantee (BG) Providers & Real Bank Instrument Providers
NEWS FLASH: Grand City Investment Limited is a Genuine Bank Guarantee Providers, top BG Provider, real bg/sblc provider, top bank guarantee provider, international bank guarantee providers, Bank Instrument Provider, financial instrument provider and monetizers of bank instruments.
1. HISTORY / EXPERIENCE: The best way to know if your bank guarantee provider is real or not is to check how many years they have been in business. Personally I will choose a bank instrument provider that has been in business for decades over one that just started a few years ago. Same way I would prefer a medical doctor with 30 years experience over a doctor that has just one or two years experience. History and Experience is everything.
2. Background Check: Run background checks on the company to make sure that they are real and legit.
3. INCORPORATION: Check if it is a legally registered company or fake one. Ask for their incorporation certificate.
URGENT NOTICE: It might interest you to know that there are only 10 genuine sblc providers in the world and Grand City Investment Limited is amongst the top 5 bank instrument providers in the world. Contact us if you want to know the list of genuine bank guarantee providers in the world and we will be glad to share that information with you.
So if you are in the market for bank instruments such as SBLC (Standby Letter OF Credit) or Bank Guarantee (BG) then make sure you use a reputable Financial Services Provider with decades of experience like Grand City Investment Limited, the benefits of following this approach is to give you peace of mind that your interest would be protected and you surely would be getting the best deal.
Meaning of Bank Guarantee:, Types of Bank Guarantee, Uses of Bank Guarantee, Bank Guarantee Advantages, Bank Guarantee Charges & Bank Guarantee Process.
What is the Meaning of Bank Guarantee (BG)?
A bank guarantee is a promise from a bank or a financial institution that if a particular borrower defaults on a loan, the bank will cover the loss. The bank guarantee signifies a lending institution ensures that the liabilities of a debtor is going to be met. In other words, if the debtor is unsuccessful to settle a debt, the bank will cover it. A bank guarantee allows the customer, or debtor, to acquire goods, purchase equipment or draw down a loan.
A bank guarantee acts similarly to a line of credit, except that a line of credit can be drawn upon at will by the bank’s client. A bank guarantee is used only if the client does not pay its vendor an agreed-upon amount. U.S. credit institutions are forbidden from assuming guarantee obligations, and therefore most international transactions require a standby letter of credit.
Types of Bank Guarantees
There are many different types of Bank Guarantee namely:
- A Payment Guarantee assures a seller the purchase price is paid on a set date.
- An Advance Payment Guarantee acts as collateral for reimbursing advance payment from the buyer if the seller does not supply the specified goods per the contract.
- A Performance Bond serves as collateral for the buyer’s costs incurred if services or goods are not provided as agreed in the contract.
- A credit security bond serves as collateral for repaying a loan.
For example, St. Marys hospital is a new hospital that wants to buy $1 million in medical equipment. The equipment vendor requires St. Marys hospital to provide a bank guarantee to cover payments before they ship the equipment to St. Marys hospital. St. Marys hospital requests a guarantee from the lending institution such as Grand City Investment Limited keeping its cash accounts. Grand City Investment Limited essentially cosigns the purchase contract with the vendor.
Uses of Bank Guarantee
- When large companies purchases from small vendors, they generally require the vendors to provide guarantee certificate from banks before providing such business opportunities.
- Predominantly used in the purchase and sale of goods on credit basis, where the seller is assured of payment from the bank in case of default by the buyer.
- Helps in certifying the credibility of individuals, which in turn, enables them in obtaining loans and also assists in business activities.
Though there are lots of uses from a bank guarantee for the applicant, the bank should process the same only after ensuring the financial stability of the applicant/business. The risk involved in providing such a guarantee must be analysed thoroughly by the bank
Advantages and Disadvantages of Bank Guarantees
Bank guarantee has its own advantages and disadvantages. The advantages are:
- Bank guarantee reduces the financial risk involved in the business transaction.
- Due to low risk, it encourages the seller/beneficiaries to expand their business on a credit basis.
- Banks generally charge low fees for guarantees, which is beneficial to even small-scale business.
- When banks analyse and certify the financial stability of the business, its credibility increases and this, in turn, increase business opportunities.
- Mostly, the guarantee requires fewer documents and is processed quickly by the banks (if all the documents are submitted).
On the flip side, there are some disadvantages such as:
- Sometimes, the banks are so rigid in assessing the financial position of the business. This makes the process complicated and time-consuming.
- With the strict assessment of banks, it is very difficult to obtain a bank guarantee by loss-making entities.
- For certain guarantees involving high-value or high-risk transactions, banks will require collateral security to process the guarantee.
Bank Guarantee Costs & Charges
Generally, BG charges are based on the risk assumed by the bank in each transaction. For example, a financial BG is considered to assume more risk than a performance BG. Hence, the fee for financial BG will be higher than the fee charged for performance BG.
Based on the type of the BG, fees are generally charged on a quarterly basis on the BG value of 0.75% or 0.50% during the BG validity period. Apart from this, the bank may also charge the application processing fee, documentation fee, and handling fee.
In some cases, security is required by the bank from its applicant, which is generally 100% of the BG value. In certain cases, collateral security or cash margin may also be accepted by the issuing bank. But we offer more flexible terms than banks, contact us today to get a free quote and free consultation.
What is the difference between Bank Guarantee (BG) & Letter of Credit (LOC)
Bank Guarantee is not the same as a letter of credit, although with both instruments the issuing bank accepts a customer’s liability if the customer defaults. With a guarantee, the seller’s claim goes first to the buyer, and if the buyer defaults, then the claim goes to the bank. With letters of credit, the seller’s claim goes first to the bank, not the buyer. Although the seller will likely get paid in both cases, letters of credit offer more assurance to sellers than guarantees generally do.
LOC is a financial document which imposes an obligation on the bank to make payment to the beneficiary on completion of certain services as required by the applicant. LOC is issued by the bank when the buyer requests his bank to make payment to the seller on the receipt of certain goods or services.
That is, when the buyer runs into cash flow difficulties or similar situations and thus cannot make immediate payment to the seller, he will approach his bank to make the payment to the seller on submission of certain documents. The bank will later recover the amount paid from the buyer along with the required charges.
On the other hand, under BG, the bank is required to make payment to the third-party only if the applicant fails to make the payment to the third-party or does not fulfil the required obligations under the contract. A BG is essentially used to ensure a seller from loss or damage due to the non-performance by the other party in a contract.
However, there are a lot of differences between LOC and BG.
Major differences between Letter of Credit (LOC) and Bank Guarantee (BG)
|Nature||LOC is an obligation accepted by a bank to make payment to a beneficiary if certain services are performed.||BG is an assurance given by the bank to the beneficiary to make the specified payment in case of default by the applicant.|
|Primary liability||Bank retains the primary liability to make the payment and later collects the same from the customer.||The bank assumes to make the payment only when the customer defaults to make payment.|
|Payment||Bank makes the payment to the beneficiary as and when it is due. It need not wait for a default to be made by the customer.||Only when the customer defaults the payment to the beneficiary, the bank makes the payment.|
|Way of working||LOC ensures that the amount will be paid as long as the services are performed as per the agreed terms.||BG assures to compensate for the loss if the applicant does not satisfy the specified conditions.|
|Number of parties involved||There are multiple parties involved here – LOC Issuing bank, its customer, the beneficiary (third party), and advising bank.||There are only three parties involved – banker, its customer, and the beneficiary (third party).|
|Suitability||Generally, this is more appropriate during the import and export of goods and services.||Suits any business or personal transactions.|
|Risk||Bank assumes more risk than the customer.||Customer assumes the primary risk.|
What is Bank Guarantee Funding? Bank Guarantee funding is the process of converting a bank guarantee into a cash or legal tender.
What is the LTV (Loan To Value) for leased bank instruments? As genuine bank instrument providers, we offer the best rates in the industry. All our bank instruments are issued from prime banks and we offer 80% LTV which you cannot get elsewhere. So why go elsewhere?
Bank Guarantee Process- How to obtain bank Guarantee (BG) From Top Banks
One of the easiest and best ways to obtain a bank Guarantee (BG) Is through Grand City Investment Limited which was incorporated in Hong Kong as a Government Licensed Money Lender. We are leading providers of Business Loan, SME Loans, Project Financing, Recourse Loan, Non Recourse Loans and Bank Financial Instruments such as Standby Letter of Credit Funding, Bank Guarantee, Performance Guarantee Bond, Tender Bond Guarantee, Advance Payment Guarantee, Bank Comfort Letter, BG/CD/BD/BCL/DLC/LOC/SLOC/SBLC etc.
We have been providing these financial services to our numerous customers all over the world including importers, exporters as well as customers that need credit enhancements or trade finance facilities to execute projects locally or internationally.
Our loan interest rate is just 3% annually and you can get loan financing from us with or without security or collateral. The loan term is up to 30 years with a grace period up to 3 years for those in the construction industry.
Our bank instruments, bg and sblc/sloc are issued from prime banks such as Barclays Bank London, Standard Chartered Bank, HSBC Hong Kong or any rated AAA bank of your choice. All our financial instruments are Cash-Backed and can be used as collateral to secure funding for projects, Discounting, Monetization and Private Placement Programs (PPP).
BROKERS: We welcome new brokers who are direct to their clients. New brokers are welcomed and are rewarded with 2% commission on every deal they bring to us.