A lot of traders and contractors are struggling to achieve good financial stability to sign new contracts and trade deals. For this, they used to look for banking services that can help them. Fortunately, banks and other lending providers are available to provide different types of Bank Instruments on their behalf. Further, one of the most popular trade finance services that traders and contractors mostly use to expand their business is a Letter of Guarantee. Here we are going to discuss – What is Bank Guarantee and How Does It Work?
A Bank Guarantees is a banking service offered on behalf of their client to ensure that all obligations will be met without any default. Since the banks are giving the written undertaking; in case, if the client has failed to meet the contractual terms; then the banks are liable to cover it.
When it comes to trade transactions, traders who are dealing with overseas business partners require some sort of guarantee to secure their deal from payment and performance risks. Here comes the importance of availing BG MT760. Also, traders mostly preferred to use BGs; because banks work as a guarantor of the transaction.
For example: If a buyer wants to purchase $3 million worth of machinery from an overseas vendor. Then the buyer needs to provide an MT760 to cover the payments; before the shipment of equipment. Via this BG MT760, the issuing banks assure that the buyer will make the payment to the seller; once they receive the shipment. Further, it also assures that in case of any default by the buyer in terms of payment; then the banks will pay the liabilities.
Having BG reflects the confidence of the bank in the buyer’s business; also, which indirectly bona fides the soundness and credit status of the buyer. Further, when two new parties going to enter into a contract for the building construction or for the supply of goods; they both were skeptical about the performance of the party; they are going to deal with. In such cases, by standing as a guarantor, the banks help both parties to secure their interests.
Anyone who has a good financial record can apply for BG MT760. They can contact their bank to avail BG on their behalf. Before approving the BG request, the bank will do a thorough check of your previous banking history, and credit score, and so on. In certain cases, banks will demand the buyer to provide security to cover the BG value. Once the bankers are satisfied with all the criteria; then only they will provide the approval required for BG issuance. And usually, all these processes will take weeks or even months to complete.
In case, if you are looking to avail BG MT760 for your trade deal in hand; also, if you don’t want to block your cash funds to obtain a Letter of Guarantee? Then get help from us!
We, the International Bank Guarantee Providers in Dubai are always here to assist you with all your BG needs.
Submit your BG Requirements to us & get the Letter of Guarantee in less than 48hrs.