What Is a Bank Guarantee? Uses, Process & Real Examples
What Is a Bank Guarantee? Uses, Process & Real Examples
A properly structured bank guarantee can help you unlock capital, qualify for contracts, and give your partners the confidence to move forward.
A bank guarantee is a financial instrument that assures a third party (typically a lender, supplier, or government authority) that you will meet a financial or performance obligation. If you fail to do so, the bank will step in and pay on your behalf. It’s not a loan — it’s a promise.
Why Bank Guarantees Exist
In international trade, construction, and large procurement, trust needs more than just a handshake. Bank guarantees reduce the risk for counterparties — whether you’re bidding for a government project or seeking advance terms from a supplier.
Types of Bank Guarantees
- Payment Guarantee: Assures the seller or service provider that payment will be made.
- Performance Guarantee: Ensures a project will be completed according to contract.
- Advance Payment Guarantee: Protects against misuse of a deposit or mobilization fund.
- Bid Bond: Guarantees commitment during tendering.
- Financial Guarantee: Covers loan or credit facility obligations.
Who Uses Bank Guarantees?
- EPC contractors bidding on infrastructure projects
- Importers negotiating deferred payment terms
- Exporters offering post-shipment flexibility
- Project developers seeking bridge capital
- Capital raisers needing to satisfy investor protections
Real Example: Using a Bank Guarantee to Unlock Project Capital
One of our clients, a mid-sized solar EPC developer in North Africa, had secured a 10MW public contract — but couldn’t receive funding without a bank guarantee covering the first drawdown. Traditional banks declined. We structured the deal through an offshore SPV and had the guarantee issued via our partner network. The project moved forward within two weeks.
How to Get a Bank Guarantee
Option 1: Through Your Bank
If you have a relationship with a top-tier bank and sufficient collateral, you can request issuance directly. This may take 2–4 weeks and comes with tight compliance checks.
Option 2: Through a Structured Finance Platform (like Financely)
We work with clients who need bank guarantees but don’t have collateral or the right issuer relationship. We structure the request, set up an SPV if needed, and source the instrument through our global partner network.
Documents You'll Need
- Signed contract or project documentation
- Corporate KYC + financials
- Guarantee application form (we provide this)
- Use of funds and repayment plan (if funding-related)
Bank Guarantee vs SBLC vs Performance Bond
Bank Guarantee: General-purpose assurance — flexible use across sectors.
SBLC: Used primarily in financial deals as a fail-safe — more common in trade.
Performance Bond: Enforced against failure to execute a project or contract — highly specific in tenders.
Cost of a Bank Guarantee
Fees range from 1.5% to 5% per annum of the guarantee value, depending on the risk, duration, and structure. Most require a retainer, and some include intermediary structuring fees — especially if issued via private credit or offshore vehicles.
Need a Bank Guarantee to Close a Deal?
We help clients issue performance, payment, and financial guarantees globally — fast, confidentially, and backed by real banks.
Submit Your Deal Book a 1:1 CallBottom Line
A bank guarantee is more than paperwork — it’s a door-opener. It can mean the difference between qualifying for capital or watching it go to a competitor. At Financely, we help our clients structure credible requests, navigate lender expectations, and access guarantees through global financial partners. If your deal is real, let’s get you the backing to close it.
Get Started With Us
Submit Your Deal & Receive a Proposal Within 1-3 Working Days
Submit your deal using our secure intake form, and receive a quote within 1-3 business days. Existing clients can connect with their relationship manager through our secure web portal.
All submissions are
promptly reviewed, and all communications are conducted through the intake form or the client portal for a seamless and secure process.
Thank you for considering working with us. A nominal fee of US$500 is required upon completion of each form. This fee covers the time and effort we invest in reviewing your submission and crafting a thorough proposal. We receive numerous inquiries and prioritize those that carry this fee, ensuring serious applicants receive prompt attention.
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