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Bank Guarantee Types & It's Advantages

With the help of Bank Guarantee (bg), an importer or exporter get various opportunities since they can work with different and reliable partners.

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Bank Guarantee Types & It's Advantages

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  1. What is Bank Guarantee? It's Types & Advantages

  2. A lot of individuals especially business owners are struggling to achieve financial stability. • That’s why; they are looking for services that can help them. Fortunately, banking and lending companies provide different financial services. • And, one of the most popular services business owners make use of is a bank guarantee funding. What is Bank Guarantee? • A bank guarantee is a service offered by banking or lending institution to ensure that liabilities of a debtor will be met.

  3. Bank guarantees are also known as products of credit to ensure the successful completion of the commitments they have made their customers to future international exchanges. • If the customer failed to settle their debts, the bank or lending company will cover it. • Mostly the banks function as guarantors of the transaction therefore the bank guarantee (bg) are used mostly by exporters and importers. • Some people think that bank guarantee having similar characteristics like any other financial instruments but according to financial experts bank guarantee are unique due to their high value, flexibility, resale potential, and discount.

  4. Types of Bank Guarantee: There are mainly two types of Bank Guarantees • Performance Guarantee also known as the Guarantor is the one which is issued by the bank which guarantees the ability of the applicant to perform a contract directly in favor of the Beneficiary. Financial Guarantees also known as indirect guarantee is used to secure a financial commitment such as a loan.

  5. Other types of BGs are as Follows • Deferred payment Guarantee • Shipping Guarantee • Advance payment Guarantee Benefits of Bank Guarantee (BG) • First and foremost, buyers are not required to make the advance payment in case of bank guarantee. Because of this, they can make use of their funds in other important ventures. • Bank Guarantee funding solution also requires less number of documents as well as no necessity for collateral.

  6. With the help of BG, an importer or exporter get various opportunities since they can work with different and reliable partners at local and international markets.

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