How to Get A Bank Guarantee In Nigeria

How to Get A Bank Guarantee In Nigeria. Learn How To Get A Bank Guarantee Easily In This Post. Learn More Here.

How To Get A Bank Guarantee

Are you seeking a bank guarantee? Do you seek information on how to successfully  get a bank guarantee in Nigeria? Look no further as you have gotten to the right platform for such information. We have figured out that a lot of people have challenges in getting a bank guarantee as a result of lack of proper information. To this end, we have prepared a well detailed article which would help you with everything you need to know about getting a bank guarantee in Nigeria.

We would need to properly understand what a bank guarantee really is before we look at the complexity of getting a bank guarantee in Nigeria.

What is a bank guarantee?

A bank guarantee is simply a promise that is made by a bank for its customer (s) which means that the particular bank would be responsible for any financial loss one suffers from in the course of engaging in a business with the other pay if the customer is not able to pay. This guarantee can either be direct or indirect.

Direct bank guarantee refers to a guarantee that is issued by the bank to favor its customer to start a business between him or her and its business partner. On the other hand, indirect guarantee refers to a guarantee that in favor of another bank to help provide financial confidence concerning a transaction, it is usually issued as a counter guarantee.

In simpler words, a bank guarantee is a contract (written) given by banks on behalf of its customer(s). Bank guarantee is given on a legally binding commitment between the bank and its clients. Such assurances are broadly utilized in business and individual exchanges to shield the outsider from money related misfortunes.

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What are the forms of bank guarantee we have?

We have two forms of bank guarantee and they:

  1. Conditional bank guarantee
  2. Unconditional bank guarantee

What are the characteristics of  a bank guarantee?

Everything in life is has one characteristics or the other and a bank guarantee is not also left out.  Here are a few characteristics of a bank guarantee:

  1. Bank guarantee is drawn by a record holder, where he/she arranges his/her bank to contact the bank of the other party.
  2. Assets or Resources will be held by the bank as a security
  3. Bank Guarantees are non-transferable.No one has the privilege to sell/buy it.
  4. CUSIP or ISIN numbers are absent in these guarantees.
  5. These are given for a particular time frame.
  6. These guarantees end once they get terminated.
  7. The end estimation of such guarantee is nil. There is no development worth and venture component.
  8. There is a colossal distinction between bank guarantees and investment notes.
  9. This administration isn’t given to fund-raise by banks thus ought not be mistaken for Medium Term Notes (MTN).
  10. These guarantees are as solid as the bank giving them.

What are the advantages of a bank guarantee?

There are many advantages or benefits of a bank guarantee and I have put together some that would be helpful to you and they include:

  1. It helps in reducing financial risks
  2. It helps in increasing opportunities for a business
  3. One does not need any advanced payment
  4. Bank charges very small fees for this
  5. It helps in increasing credibility
  6. It does not require so much documentation

Read Also: Top 20 Functions of the Central Bank of Nigeria

What are the disadvantages of a bank guarantee?

Anything that has an advantage must surely have a disadvantage. There are also some disadvantages of bank guarantee which I have helped to outline some of them:

  1. There is usually a strict assessment of the individual by the bank
  2. Collateral are many at times not enough
  3. It is not very suitable for making loss in a business

What are the types of bank guarantee we have?

There are different types of bank guarantee which I have outlined and they are:

  1. Performance bond guarantee
  2. Bid bond guarantee
  3. Warranty bond guarantee
  4. Advance payment guarantee
  5. Payment guarantee
  6. Rental guarantee
  7. Confirmed payment order guarantee
  8. Letter of indemnity

How long does one need to wait to get a bank guarantee?

A bank guarantees normally should not take so much time to get. However, this strictly depends on the bank after the individual has submitted the necessary documents needed. The time frame varies in different banks.

What parties are involved in the bank guarantee process?

There are basically three parties involved in a bank guarantee process which are:

  1. The bank
  2. The debtor
  3. The creditor

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What are the documents needed for one to apply for a bank guarantee?

There are some documents that are very crucial for one to get a bank guarantee. Without these documents, it is quite impossible for one to get a bank guarantee. These documents include:

  1. A request letter and counter indemnity cum memorandum relating to charge over fixed deposit duly stamped.
  2. The bank guarantee text
  3. Board resolution for private limited company or limited company.

How can one get a bank guarantee in Nigeria?

One important thing one should know about getting a bank guarantee is that it is not only limited to business customers and other individuals can apply for them as well. Getting a bank guarantee should be an extremely difficult job to do. I have outlined about 4 simple steps on how to get a bank guarantee in Nigeria, if you follow these steps properly, getting a bank guarantee wouldn’t be very difficult for you. Here is how you can easily get a bank guarantee in Nigeria.

STEP 1: if you are in need of a bank guarantee, you would need to first apply for a loan from the creditor or a beneficiary.

STEP 2: the bank guarantee cannot come through if the two parties do not comply to apply for the bank guarantee. Make attempt to reach an agreement so that you can get a bank guarantee

STEP 3: next, you would need to apply to the bank to get a guarantee for the loan you have taken from the creditor or beneficiary

STEP 4: at this stage, the bank would then provide a bank guarantee.

 

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Ruth Aldama

Ruth Aldama is a Content Developer at BenUpdate.com. Ben Update Is A Team of Resource Persons and Consultants. If You Need A Personal Assistance on This Topic, Kindly Contact Us.

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