Examples of Bank Guarantees
1. Performance Bond Guarantee: If the seller doesn’t provide the goods or services as stated in the contract, the buyer can use the performance bond guarantee to cover their costs.
2. Advance Payment Guarantee: This is a promise to return the buyer’s advance payment if the seller doesn’t deliver the goods agreed upon in the contract.
3. Warranty Bond Guarantee: This is collateral that makes sure the goods you order are provided as agreed.
4. Payment Guarantee: A payment promise tells the seller that the buyer will pay the price on a certain date.
5. Rental Guarantee: A rental promise is a piece of paper that proves you can pay your rent. One program that the World Bank gives is a bank guarantee program for projects. These guarantees protect business lenders in case borrowers don’t pay or governments don’t do what they’re supposed to do.