BONDS & GUARANTEES
In many countries, mainly banks provide bank guarantees. The big disadvantage of this is that banks will subtract this
from your bank credit.
More and more insurers are involved in issuing surety bonds. Normally, they do not ask companies for guarantees, and they will not reduce your bank credit. In addition, the credit rating of many insurers is much better than that of banks.
There are several kinds of surety bonds:
- Bid bond: Provides financial protection to the owner if a bidder is awarded a contract but fails to sign the contract or provide the required performance and payment bonds.
- Performance bond: Provides an owner with a guarantee that, in the event of a contractor’s default, the surety will complete the contract or have it completed.
- Payment bond: Ensures that certain subcontractors and suppliers will be paid for labour and materials incorporated into a construction contract.
- Warranty bond (also called a maintenance bond): Guarantees the owner that any workmanship and material defects found in the original construction will be repaired during the warranty period.
Keystone Trade Credit and its partners work with several insurers with strong credit ratings to set up facilities for surety bonds
