The use of bank guarantees is popular among business owners seeking corporate finance services in Dubai. A bank guarantee is a promise by a commercial bank to the beneficiary that it will assume liability for the debtor if it fails to meet the obligations.
Bank guarantees are an important part of trade finance services in Dubai as the bank offers to be the guarantor on behalf of a client, eliminating the risk involved in a trade transaction.
However, most businesses may find the process of getting a guarantee complex for which they can use the services of corporate finance companies in Dubai. This blog will help business owners to find useful insights into the use of bank guarantees in the UAE.
What Is A Bank Guarantee?
A bank guarantee comes into effect when two parties agree to complete a trade transaction. Through a bank guarantee, the bank promises money to the beneficiary but it will pay the amount only when the other party fails to meet the obligations set out in the contract.
A bank guarantee safeguards a trader from potential damage or loss that may come from the non-performance of one of the parties to the agreement. If one party fails the contract, the other can file a claim and receive the guaranteed sum.
Who Uses Bank Guarantees More Often?
In most common cases, a bank guarantee becomes part of an agreement between large companies and small companies. Large companies require protection against the risk posed by small companies toward trade transactions. Therefore, the large company demands that small businesses already receive a bank guarantee in advance of work.
Directly approaching a bank may not help a small company to get a bank guarantee easily. Therefore, corporate finance services can help business owners to get a bank guarantee facility in time.
Features And Benefits Of Bank Guarantees In The UAE
Understanding the advantages and features of obtaining a bank guarantee in the USE is good for business owners as they can easily meet big trade transactions. Applying for a bank guarantee through companies providing services in Dubai will make the process more hassle-free and simpler.
A bank guarantee ensures that the price of purchase will be paid on a decided date. A bank guarantee also serves as collateral to reimburse the advance payment from a buyer if the seller fails to supply the goods according to the contract.
Moreover, the confirmed payment order is an obligation and the bank pays the beneficiary a set amount on a decided date on behalf of the client.
Types Of Bank Guarantee Businesses Can Avail
There are types of bank guarantee businesses can avail:
- Loan guarantee
- Performance guarantee
- Advance payment guarantee
- Deferred payment guarantee
- Shipping Guarantee
Consult With The Best Corporate Finance Companies In Dubai, UAE
Businesses looking to get bank guarantee facilitates can go to corporate finance firms in Dubai such as ebs to navigate the tough requirements set out by the banks. As a leading provider of these services in Dubai, we have partnered with top banks in the county. This means getting a bank guarantee in the use is no longer a problem for businesses. We are also providing top-notch trade finance services in Dubai including letters of credit, bank overdrafts, business loans, and project finance.
ebs likewise offer services, such as accounting and bookkeeping services, VAT services, Auditing, Due Diligence audit services, and many more.
Feel free to contact us with any additional inquiries or requests for accounting services. A free discussion will be given to you by our specialists, who will answer your request immediately.