How to Get Performance Bond
To get Performance Bond from rated European Banks, please follow the steps given below:-
1. Firstly, the seller or the contractor submits their Performance Bond request in terms of a signed SPA or contract.
2. After that, we will review the trade deal between both parties. And also, we will inform our approval to the party; if their request falls under our terms.
3. If approved, we will sign a service agreement with the client. Also, we will inform them about our service charges to proceed further.
4. Once they sign the agreement and pay the service charges; we will start to process their guarantee request.
5. Further, we will send the MT760 draft to the client for their review. Also, we will request them to pay the BG issuance fee; also to provide further documents.
6. Once we received the approved draft and issuance fee, we will proceed right away! Further, we will open the Performance Guarantee from our bank account with the European Bank. And then, this will be issued via Swift MT760. Further, the entire process will not take more than 2 days.
Apply For Performance Guarantee
Performance Guarantee Video
What is Performance Guarantee?
Performance Guarantee is a financial tool issued by a bank on behalf of their clients. This Bond ensures that the client will positive fulfillment of the project or trade deal. Further, this MT760 acts as a surety for both the parties involved in the contract or trade deal.
When signing a new construction contract, project owners are skeptical about the performances of the contractors. So, they usually demand a Bank Guarantee which assures the positive completion of the task towards the project owner.
Further, this bond also assures that in case if the contractor fails to complete the project as per the agreed contract; or the seller defaults in the supply of goods; then the project owner or the buyer can claim the bond to get the compensation; i.e. for any monetary losses up to the amount of the bond.
Importance of Performance Bond
Usually, when it comes to construction contracts or trade deals, traders & project owners prefer to work with the one; who provides the required assurance in terms of completion of a specific task or the supply of goods.
Having Performance Bond protects the buyer or the project owner against the risk of the contractor or seller fails to comply with the agreed terms. Also, it assures the positive completion of work within the stated deadline; also, within the allotted quote. Since contractors & sellers are giving these assurances towards their counter parties; it makes them more appealing in the bidding process. Further, this, in turn, increases their chance of winning the bidding contest; also signing worthy contracts and trade deals.
How to Qualify for a Performance Guarantee
If you are looking to avail BG MT760 to assure your performances towards your counter parties, then we are here to help you!
Usually, when it comes to availing bank support, we used to contact our banks. But when you contact your bank for the issuance of MT760; they may demand you to provide a certain percent of the bond value as cash margin to block in your account.
Further, we understand that meeting all the demands of the bank & getting MT760 issued is not an easy task. So, we the Bank Guarantee Providers in Dubai assist you to get all types of Guarantees including Performance Guarantees without blocking your cash margin.
Further, to get qualify for bank guarantees, you can contact us!
Performance Guarantee in Construction Contracts
Performance Bonds are mostly used in construction projects to assure commitment as per the agreed contract. Further, this bond assures the completion of the work; even in case of lack of cash flow or bankruptcy of the contractors.
Usually, BGs are issued on first written demand. This means, if there is any default by the contractor, then the project owner can claim the bond to get the compensation required. Further, in order to claim the payment; the project owner may or may not be required to prove the default of the contractor.
In case of contractor default, a new contractor will be hired by the bank with the consent of the project owner; to complete the pending work. In such a case, the contractor needs to bear the cost to complete the remaining work of the project. Further, this includes material costs and labor charges. And the bank will pay the new contractor the amount; they spent to complete the work.
Performance Bond Value
All contractors are likely required to provide a Bank Guarantee; when they are signing a new project or contract. When you submit a bid for the project, we can’t able to figure out the exact cost required for the completion of the project. Also, it would be difficult to provide the cost that covers the bond value.
As a rule of thumb, the bond value covers normally 10% of the contract value. Thereupon, it replaces the tender bid, once the contract is awarded and the Performance Bonds are issued. Moreover, this bond is always Irrevocable; that means it cannot be canceled or revoked. Also, it can terminate only; once the contractor has fulfilled all their terms towards the principal party.
Parties Involved in Bank Guarantee
- Supplier or Contractor
The one, who requests their bank for MT760 to prove the positive completion of the work or trade deal.
- Buyer or Project Owner
The one who receives the MT760 in their favor.
The one who stands as a guarantor; by assuring that the contractor or the seller will fulfill the terms; as per the contract.
Benefits of Bank Guarantee
For Developers / Buyers:
- Assures contractors / sellers will adhere to the terms as per the surety bond.
- Serves as a warranty against low grade work / supply.
- Make contractors / sellers accept their fault; if it occurs while performing the job / supplying.
- Also, it ensures that everyone involved in the project gets paid; even if there any defaults occur.
For Contractors / Suppliers:
- It gives assurance that the contract will be honored.
- It assures the positive completion of the project; also the supply of goods.
- Also, it serves as a surety for the project owner and buyer; in case of default.
Performance Bond Cost
The Performance Bond cost includes bank commission, swift charges, and also basic operating costs. For instance: it includes the charges for credit reports and so on. Further, if you have any queries in regard to the cost; you can send your query and our team will assist you.
Performance Bond Providers
Getting a payment bond seems to be a daunting task; as it blocks a huge cash flow of the company. We, the Performance Bond Providers in Dubai understand the problem and provide MT760 from our own rated bank accounts. Therefore, there is no need for you to block any cash funds to get the bond issued on your behalf.
By choosing us, you’ll get:-
- Fast and prompt service.
- Deal close in 48 working hrs.
- Partnered with rated banks.
- Also, guidance throughout the process of getting MT760.
Are you in the construction field? Gearing up for a new project? Certainly, the project owner will require a guarantee that assures that you’re able to complete the job without any default; if assigned. So, get Bank Guarantees from us and get ready to sign worthy contracts!