Bank Guarantee Process
Follow the Bank Guarantee Process mentioned below to apply Letter of Guarantee from Rated Banks without blocking cash funds:
1. At first, the buyer presents their trade deal by sending a buy and sell agreement or proforma invoice for their trade deal or project.
2. Further, we will review the trade deal between the buyer and seller. And then, we will inform the party if the request is approved or not.
3. And then, if approved, we will prepare the service agreement between the client and us. After that, we will forward it to them for their signature. Meanwhile, we will also inform them about the service charges to issue BG MT760 on their behalf; without blocking their cash funds.
4. Further, following the signature on the agreement and payment of service charges, we will start working on their deal.
5. Further, we will send the draft of the BG MT760 to the client for their review.
6. Finally, upon receipt of the issuance fee and documents, we will open a BG from our account (European Bank). And then, it will transmit via MT760 swift to the seller’s account.
Apply for BG MT760
Bank Guarantee Video
Letter of Guarantee
Letter of Guarantee is a written undertaking issued by a bank on behalf of their client to assure the payment commitment towards the counter party. If a buyer wants to procure bulk goods; then the seller may request the buyer to provide an MT760 Guarantee. Further, with BG MT760, the buyer assures the seller; that they will meet their commitment as agreed in the signed contract.
Since BG MT760 gives the required assurance, BGs are mostly preferred by traders while doing overseas trade deals. Further, by assuring payment commitment; traders can do multiple deals with global suppliers that they would not be able to make without BG. Also, BGs can assist traders to acquire goods, draw down loans. Further, it also helps to secure contracts and leasing agreements without typing their cash funds. Certainly, only with the use of BGs, most of the firms manage and expand their business worldwide.
Importance of Letter of Guarantee
Usually, a Letter of Guarantee gives the payment commitment towards the seller, on behalf of the buyer. On the other hand, if the seller is unable to supply the product; then they will be liable to pay the penalty to the buyer as per the amount agreed in the contract. Also, by this, MT760 both parties (buyers & sellers) will have the surety for their commitment vice versa.
As it secures both parties from fiscal risks, suppliers & buyers often prefer to do business using BGs. Apart from reducing the risks involved in the payment for the products they supplied; it also helps traders to establish good credit status with their new suppliers.
Parties Involved in Bank Guarantee
- A Buyer – Known as an applicant who applies for BG MT760
- Issuing Bank – The issuer who issues the required MT760
- Seller – Who Receives the Issued BG
- Beneficiary Bank – The one who receives the BG on their client’s behalf.
When it comes to applying a Guarantee bond for construction projects; the contractor needs to provide BG in favor of the project owner. Further, this proves the contractor’s creditworthiness; also their commitment to perform the work without any delay or default.
Types of Bank Guarantees
This Payment Bond issued by a bank serves as a commitment between the buyer and the seller. Also, this assures the payment made upon the shipment of goods. Similarly, such types of MT760s are mostly used in global trade. And, this serves as a surety, in case of default.
This is issued by the seller in favor of the buyer. In brief, this bond compensates; if a seller fails to perform as per the agreed contract. Accordingly, for which, the buyer needs to claim against this bond from the seller’s bank. However, the buyer can claim only a certain amount i.e. around 2% to 5% of the total contract value.
Advance Payment Bond
When a seller asks for an advance payment; the buyer can demand APG MT760 from their seller. Also, this is to secure the advance payment; in case the seller fails to fulfill their terms as set in the contract.
This type of MT760 normally a commitment from a tenderer to execute a contract in case if awarded.
Bank Guarantees in International Trade
- Allow the buyer to secure better contracts or trade deals.
- There is no need to make an advance payment or tying up all your capital in a single deal. And so, you can spread around; also, can do multiple deals at a time.
- Less paperwork required, so you can focus on your core business.
- The seller will able to perform quickly without asking for advance payment. Also, it protects them against the risks involved in the non payment of goods.
- And also, the buyer gains reliable trader status in both local and global markets.
Bank Guarantee Charges
The cost mainly includes commission, negotiation fee, and also transmission charges. Also, the MT760 fee is usually paid by the buyer. On the other hand, the negotiation fee paid by the other party.
Further, to get more details on the tariff, contact us now!
International Bank Guarantee Providers
Do you require some sort of security that proves your credibility and allows you to acquire more contracts globally?
Avail Letter of Guarantee from us to expand your business globally! We help business firms to avail lucrative contracts by providing them BG MT760.
Being a Bank Guarantee Providers in Dubai, we work directly with international banks to issue the guarantee you require. By having our strong presence in the trade finance market; also, with over 25,000 plus satisfied clients; we provide a hassle free process for issuing bank instruments on your demand.