Bank guarantee is another methodsecuring loans. In fact - this is a guarantee for the borrower. But the credit organization is entrusted for it. The bank acts in the transaction as a person who gives a guarantee to the creditor (the beneficiary). In case of default by the borrower (principal), the guarantor pays his debt.
Along with banks, insurance companies can act as guarantors. The ability to issue such guarantees should be spelled out in the license for the provision of services.
A bank guarantee may be issued to both a legal entity and a physical entity (only if it is an individual entrepreneur). Consider the option with an individual.
Under what conditions can we expect a bank guarantee?
1. If you have an account with this bank, and it is active.
2. If you have repeatedly taken out loans in this bank, and you have a good credit history.
The guarantor gives the principal a letter of guarantee. And he does it is far from free. The letter indicates the term of the guarantee, the amount of money and the conditions under which it can be "activated".
Provision of a bank guarantee is possible when collecting a package of documents on the following list:
copy of the passport;
certificate of the amount of income received (for six months);
a copy of the employment record;
title documents on property in property (real estate, car, securities, etc.). If a bank guarantee is without collateral, then such documents are not required.
The list can be supplemented depending on the requirements of a particular bank.
If there is a moment when the borrower does not pay the loan to the lender, the latter issues a claim to the guarantor bank. The bank pays for its guarantee - and the borrower's debt now goes to the guarantor bank.
Bank guarantee is not tied to a specificcredit or liability. If you are not given a loan by one bank, then you can use this guarantee in another bank. Even if you have already repaid the loan, and the period specified in the guarantee has not yet passed, it is still valid and you can again take out a loan under it.
The bank can return its guarantee (this condition must be initially prescribed). But he has the right to do this only before the creditor has submitted a claim to him.
Depending on the options for payment of the letter of guarantee, you can distinguish the following types of it:
Unconditional guarantee - payment of the guarantee occurs at the first request of the beneficiary.
A conditional guarantee is the payment of the guarantee also at the request of the bank, but subject to the provision of documents confirming the need for this payment.
A secured guarantee is issued to the principal in return for the pledge of property.
A syndicated guarantee is when several banks act as guarantors on a loan.
In addition to securing a loan, a bank guarantee can be issued for:
Participation in auctions, auctions. Is the guarantor of serious intentions of the participant and obligatory payment of conditions of the contract in case of a victory at the contest.
Payment of the contract. It is a guarantee of payment to the supplier of goods or services of the amount specified in the contract.
These are only the most common types of guarantees.
In Russia, this type of provision is only just beginning to gain popularity. Therefore, when addressing this type of security should pay attention to the correct legal registration of the transaction.