The bank guarantee of the contract and other operations has won the trust of various entrepreneurs and commercial organizations.
This is due to its profitability, irrevocability, reliability. Fulfillment of a guarantee in the form of a bank guarantee has many advantages.
General information
The Federal Bank Guarantee is a popular commercial tool. It allows you to build relationships with profitable, serious partners, including foreign ones.
When concluding long-term contracts, bank guarantees are an important and, in some cases, inalienable requirement. State customers trust only those contractors who are able to provide such a guarantee.
Enterprises, without extracting their own funds from circulation, using bank guarantees, simply confirm solvency and purchase services or goods with a deferment at a later date. Exercise foreign economic activity also almost inextricably linked to this tool. Bank guarantees in trade agreements are sometimes the most important requirement and condition for interesting and profitable business offers.
Parties to the relationship
A bank guarantee is provided in the presence of:
- Principal (applicant). This person is a debtor, because of his will there was a need to issue a bank guarantee.
- Guarantor Bank. This institution, in fact, issues a guarantee. Upon the occurrence of the event specified in the guarantee, the bank assumes obligations to make payments to the person indicated in the document.
- Beneficiary (beneficiary). He is the person in whose favor a bank guarantee is issued. At the request of the beneficiary, the bank makes a payment when necessary.
Intermediaries
When contacting specialized companies, it is likely to get bank guarantees at competitive prices. Clients in such cases receive documents with all confirmations. The bank guarantee under the 44th law also implies entry in the register.
It should be said that brokers, agencies, specialized companies have undeniable advantages. So, for example, intermediaries have among partners various respectable, reliable banks that are included in the list of the Ministry of Finance and have all the licenses to issue bank guarantees.
Many reseller partners provide an irrevocable guarantee. The bank guarantee provided for the execution of commercial, municipal and state agreements requires a minimum package of documents.
A guarantee may be issued to secure other obligations. This, for example, may be a bank guarantee of payment of duties in favor of customs, on the guarantee of the manufacturer of alcohol, alcohol-containing products to exempt the applicant from advance excise payments in favor of tax.
"White" guarantee
Such bank guarantees work for the prestige of the principals who acquire them. A “white” guarantee costs the applicant company much less than, for example, a loan. Bank guarantees may be exempt from prepayment.
They can also be issued for acceleration. VAT refunds. Legal entities in the course of their practice understand the full benefits of bank guarantees.Having worked with this tool once, many entrepreneurs subsequently wish to receive only such security, drawn up for the purchase of a commercial, state, municipal obligation.
Price
The cost of a bank guarantee is set depending on various indicators. The price is calculated on the basis of such parameters as the applicant’s experience in fulfilling obligations similar to those that he took at the moment. The cost is also affected by the amount and duration of the bank guarantee.
Another important fact is the status of the institution providing the guarantee. As practice shows, banks TOP-50 and TOP-20 overstatement of interest. A number of institutions from the top hundreds also adhere to this policy. In addition, banks issuing a bank guarantee inadequately extend the paperwork periods to a month or more, and if you apply individually, even up to two.
Since, under the new legislation, a bank guarantee can be obtained at an institution included in the list of the Ministry of Finance, there should be no difficulties with the applicant’s requirement to draw up a document only from TOP-20-100 structures. Any financial institution from the registry will do.
Bank Guarantee Agreement
An agreement must be concluded directly with a financial institution and a participant in an electronic tender, auction, tender. It contains a description of all the terms of the transaction. It also indicates the duties and rights of the principal and the guarantor, the procedure in accordance with which issues and disputes will be resolved. The agreement also stipulates additional conditions and the amount of remuneration to a financial institution.
Types of guarantees
There are unsecured and collateralized bank guarantees. The first are considered the most demanded and popular. However, to obtain a guarantee without a pledge, it is necessary to have high financial performance and the ability to fulfill obligations assumed by yourself.
TOP-50 institutions, as a rule, assume a pledge when concluding an agreement. This condition is considered normal practice in first-class financial institutions. Real estate, a deposit, a bill can act as a pledge.
Classification
The list below reflects only irrevocable guarantees:
- Secured bank guarantees. In this case, liquid collateral is required.
- Unsecured. In such cases, the principal does not provide security.
- Direct. This type of guarantee means that the bank itself has assumed the obligation.
- Syndicated. This type of guarantee is intended for large domestic and international transactions. In this case, bank guarantees issued by several financial institutions are used.
- Covered. Such guarantees are issued subject to the availability of a bill of exchange and the principal's ability to deposit funds with a guarantee issuing financial institution.
- Renewable ("revolving"). This type of document can be purchased with multiple shipments. At the same time, registration is carried out for absolutely the entire period in accordance with which the agreement is valid, and for a part of the amount from the transaction. In this regard, these tools are of particular interest to importers.
- Super guarantees. This is a separate type of guarantee. In this case, we mean the guarantor of the guarantor.
- Uncovered. These guarantees may or may not have collateral. In this case, only property acts in it.
- Counter guarantees. The issuance of documents in this case is carried out only when the principal is required to obtain a guarantee from another organization.
- Post-tender. These guarantees ensure the obligations of the winners in procurement (state and commercial) to the customer.
- Bank guarantees of a tour operator. These guarantees apply in the tourism sector. Without such guarantees, the company will not be able to obtain a license to carry out activities.
- Oncoming.This type of guarantee is required in cases where the buyer or the contractor makes demands to the seller (following the example of a compensation letter of credit).
- Litigation is a measure securing the claim.
Bank Guarantee List
The guarantees of a financial institution may vary. In accordance with this, a different purpose is established:
- Payment Guarantee - payment guarantee. It provides the applicant's obligations under payment agreements.
- Performance Bond - a guarantee of the proper fulfillment of obligations. If it is impossible to deliver products on time or in case of shortages, the guaranteeing institution pays.
- Advance Payment Guarantee - an advance return guarantee. This tool is very useful when making prepaid transactions, where force majeure circumstances and other reasons are provided for which the terms of the agreement may be violated. In such cases, each party may want to return their money.
- A guarantee in favor of the FS for debugging the market for alcoholic goods ensures fulfillment of obligations on the use of special federal brands.
- Surety for supervisory authorities is used to regulate tax payments.
- Bid Bond - offer guarantee. This is a tender form of security. In this case, the guarantor undertakes to repay the guarantee amount if the winner of the tender does not enter into an agreement. This form of security allows the organizers to reimburse the costs of new purchases.
- Security for a Credit Line - loan repayment guarantee. This form of collateral is necessary in cases where the borrower receiving the funds is not able to fulfill obligations. The guarantor, in accordance with the documentation, pays the creditor funds in the amount of the principal amount of the debt or additional interest on payments.
- A customs guarantee is issued for the temporary import of goods or equipment into the territory of another state, transfer to the owner of the warehouse for temporary storage, etc.
Finally
It should be noted that bank guarantees on favorable terms are of interest to many customers. One of the main conditions for the successful execution of a guarantee is the solvency of a person. The procedure and grounds for issuing a bank guarantee are enshrined in the relevant agreement.
A mandatory provision is to provide information on the financial condition of the principal. When issuing a guarantee, the bank takes into account absolutely everything, including credit history, presence or absence of debts, professional competence, and so on. An agreement is drawn up if the applicant meets all the requirements.
