The main aim of a bank guarantee is to encourage and stimulate domestic and foreign trade. One must note that before a bank can stand as a guarantor to a business customer or individual account holder a letter to bank for bank guarantee must have been tendered. It contains essential details about your business, your financial capabilities and much more.
Your bank will require what we have listed below to be able to vouch for you. Even though there are sometimes exceptions to this list, in this article we have listed what you should be ready to provide your bank with when seeking a BG so you won't be caught unawares.
Collateral Security
Similar to loan applications when applying for a BG you should have a tangible asset that is solely yours. It can be in the form of stocks, property, bonds, etc. This is because your asset has to be able to subsidize the risk involved to avoid the bank running at a loss. Collateral security mostly applies to trade transactions that require large funds.
Your Business’s Financial Records
Banks don't deal with shady people and so to protect their name and institution you will need to tender your business financial records both past and existing, personal financial details, bank account details, detailed personal information and contact addresses and lots more. This is necessary for your BG to be processed.
Complete Details on Past Transaction
Most banks want to see all your past payment history. Did you pay as at when due? Who can vouch for you? What companies have you done business within the past? All this gives the bank an insight on how well your company is doing. Once you have provided all the information, the bank starts processes and issues a BG.
Business Plan
Every company should have a renewed business plan every year. Before a bank guarantee can be processed or issued to you, it is necessary you tender your business plan document. The bank will like to know everything about your company and the trade transaction. From your finances to your market industry. All checks and due diligence are to ensure you are credible enough.
Personal Details
As a sole business owner in need of a BG, it is necessary you include accurate details of your assets and mortgages, for instance, the houses, cars, investments, loans and every other detail and record that concerns your finances. If your company has more than one CEO the bank will require theirs too.
You can visit here to issue a letter of bank guarantee.