A bank guarantee is another method of securing loans. In essence, this is a guarantee for the borrower. But a credit institution is charged for it. The bank acts in the transaction as a person who gives a guarantee to the creditor (beneficiary). In case of default by the borrower (principal), the guarantor pays his debt.
Along with banks, insurance companies may also act as guarantors. The ability to issue such guarantees must be specified in the license for the provision of services.
A bank guarantee can be issued both to a legal entity and to an individual (only if it is an individual entrepreneur). Consider the option with an individual.
Under what conditions can I rely on a bank guarantee?
1. If you have an account with this bank, and it is actively working.
2. If you have repeatedly taken loans from this bank, and you have a good credit history.
The guarantor issues a guarantee letter to the principal . And he does it far from free. The letter indicates the warranty period, the amount of money and the conditions under which it can be “activated”.
A bank guarantee is possible when collecting a package of documents according to the following list:
copy of the passport;
certificate of income received (for six months);
copy of the work book;
title documents for property in ownership (real estate, car, securities, etc.). If the bank guarantee is unsecured, then such documents do not need to be provided.
TIN;
SNILS.
The list may be supplemented depending on the requirements of a particular bank.
If there is a time when the borrower does not pay the loan to the lender, the latter sets a claim to the guarantee bank. The bank pays its guarantee - and the borrower's debt now goes to the guarantor bank.
A bank guarantee is not tied to a specific loan or liability. If one bank did not give you a loan, then you can use this guarantee in another bank. Even if you have already paid off the loan, and the term specified in the guarantee has not passed yet, then it is still valid and you can again take a loan under it.
The bank may return its guarantee (this condition must be initially stated). But he has the right to do this only before the creditor has put forward a claim to him.
Depending on the payment options for the letter of guarantee, the following varieties of it can be distinguished:
Unconditional guarantee - payment of the guarantee occurs at the first request of the beneficiary.
Conditional guarantee - payment of the guarantee is also at the request of the bank, but subject to the provision of documents confirming the need for this payment.
Secured guarantee - issued to the principal in exchange for a pledge of property.
A syndicated guarantee is when several banks act as a guarantor of a loan.
In addition to securing a loan, a bank guarantee can be issued for:
Participation in tenders, auctions. It is a guarantor of the serious intentions of the participant and the mandatory payment of the terms of the contract in case of victory in the competition.
Payment contract. It is a guarantee of payment to the supplier of goods or services of the amount specified in the contract.
These are just the most common types of guarantees.
In Russia, this type of security is only just beginning to gain its popularity. Therefore, when referring to this type of collateral, attention should be paid to the correct legal execution of the transaction.