Kingrise Finance Limited is a leased bank guarantee provider, providers of leased bank guarantees, Real BG/SBLC Providers worldwide, real bank guarantee provider, international bank guarantee provider and lease bg sblc providers.
What is the Meaning of a Bank Guarantee?
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 and Examples of Bank Guarantees
There are many different kinds 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 Kingrise Finance Limited ( kingrisefinance.com ) keeping its cash accounts. Kingrise Finance Limited essentially cosigns the purchase contract with the vendor. bank guarantee provider- Kingrise Finance Limited
What are the 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
What are the Advantages and Disadvantages of a Bank Guarantee?
A 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.
BG MT760 Costs / Charges
The costs of a BG MT760 includes the annual or quarterly charge for the validity period, the bank transmission fee and the commission fee to brokers which applies only if there are brokers or middlemen in the transaction.
Difference between Bank Guarantee (BG) & Letters 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 (BG) Monetization- How Do You Monetize a bg?
Monetizing bank guarantee signifies raising finance or a credit line against it. If you have bank guarantee or a letter of credit, you might be able to monetize it. For bank guarantee monetization and to raise finance against it, it is paramount that the bank guarantee has been specifically formulated for the purpose of raising finance and the BG MT760 must be issued by a prime bank such as HSBC, Barclays bank, JPMorgan Chase Bank, Bank of America or any other prime bank.
Bank guarantees from unrated banks cannot be monetized because they are useless and worthless.
Kingrise Finance Limited are monetizers of bank instruments such as Bank Guarantees (BG) and Standby Letters of Credit (SBLC). We are bg sblc monetizers.
SBLC (Standby Letter of Credit) and BG (Bank Guarantee) are both financial instruments issued by banks and financial institutions. These financial instruments are used to obtain loan and financing from banks, they are also used for trade finance, foreign exchange as well as import and export transactions.
Bank Guarantees (BGs) can be Monetized for:
- Placed into Trade Programs (PPP Private Placement Programs)
- or a Hybrid of Immediate Cash and funds in a Trade Program.
Standard Monetization Terms For BG / SBLC.
- BG and SBLC to be monetized must be issued by top 20 AAA rated banks such as HSBC, Citi, barclays, Stanchart etc.
- BG and SBLC from unrated banks cannot be monetized.
- Instruments with a Value OVER 5 Million Dollars
- BG & SBLC MUST have at least 11 months validity prior to expiry
- We prefer monetization transactions of $10 million or more, but we will accept transactions as low as $5 million transaction amount
- Transaction turnaround time between 10 to 14 working days or less
- Exceptions can be made to minimum transaction
- Brokers and intermediaries must have a legally binding agreement
- A broker must be direct to his client. We will not entertain diasy chain of brokers.
Bank Instrument Monetization is a low-cost, low-risk method of project funding or trade finance that monetizes financial instruments by converting them into cash or cash equivalent by liquidating the instruments.
Monetization converts unused assets into cash which can then be used to fund imports, exports, project financing and international trade transactions.
URGENT NOTICE: It might interest you to know that there are only 10 genuine bank guarantee providers in the world and Kingrise Finance Limited is the leading provider of bank financial instruments such as BG, DLC and SBLC. Contact us if you want to know the list of the 10 genuine bg sblc providers in the world and we will be glad to share that information with you.
What is the process to obtain or acquire a bank Guarantee (BG)?
The easiest and best way to obtain a bank Guarantee (BG) Is through Kingrise Finance Limited. Kingrise Finance Limited was incorporated in Hong Kong on 22-SEP-1999 as a Government Licensed Money Lender with CR No.: 0689078. 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.
Kingrise Finance Limited 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).
Kingrise Finance Limited will help you secure a BG Swift MT760 for your trade finance deals without obtaining any personal guarantees or financial collateral from your end.
Contact us today to know how BG mt760 can help you conclude worthy deals with your suppliers and contractors.