How to get a bank guarantee to secure a contract: procedure, conditions, documents

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

State contracts are signed on the basis of Federal Law No. 44. To fulfill this contract, special tenders are held, in which the company that offers goods or services at the lowest prices wins. But there is always a possibility that the winner for various reasons will not be able to fulfill the requirements of the customer. Under such conditions, the customer will lose a lot of time and money, so he needs a guarantee, for which the participants in the process usually turn to a reliable and trusted bank. They must understand how to obtain a bank guarantee to secure a contract, how its value is determined, and also for how long it is provided. The use of this guarantee is mandatory for participants.

Purpose of receipt

Initially, the customer and the contractor must understand what a bank guarantee is, and what is the purpose of its execution. It is provided at the conclusion of an agreement between the supplier, who is a client of the bank, and the beneficiary, represented by the customer. Usually the customer isstate or municipal enterprises.

Guarantee is a special document issued by a bank and represented by an obligation to pay the amount of funds that ensures the implementation of the contract. A guarantee is issued to ensure the following agreements:

• contract for the execution of the state order;
• an agreement concluded between commercial enterprises, but with the participation of the state;
• commercial agreements signed between private entrepreneurs and company owners.

In each option, different requirements are imposed on customers, and the price of such a banking service depends on the amount of the contract and other parameters. Therefore, all parties to the agreement must understand what a bank guarantee is, which ensures the fulfillment of the terms of the agreement.

Legislative regulation

The procedure for issuing a bank guarantee to secure a contract is regulated by various regulations, but the most important information is contained in Federal Law No. 44. Here are the rules for analyzing a transaction between state-owned companies or commercial firms.

The provisions of this legislative act should be radiated not only by contractors and suppliers, but also by direct customers who expect that their requirements under the contract will be fulfilled in a timely manner and in full.

Types of guarantees

Before obtaining a bank guarantee to secure a contract, it is important to understand the basicits varieties. Such an offer of banking institutions is considered to be in demand among numerous organizations, as a result of which banks began to qualify guarantees according to the scope of use. The main varieties include:

• Guarantee of securing an application for participation in an auction or bidding. With the help of such a banking product, it is guaranteed that the tender winner will fully fulfill his obligations that appear after signing an agreement with the customer. The size of the contract performance security, according to Federal Law No. 44, is usually 5% of the contract price. The duration of such a guarantee depends on the period for which the contract is signed.
• Guarantee to enforce the contract. This option is considered the most popular and often ordered. The company that won the tender needs this security. In order for the customer to conclude an agreement with such an organization, it must transfer a guarantee that it will fulfill its obligations. If the result of the work is of poor quality, then it is the banking institution that undertakes to pay the customer various fines and pen alties. By increasing the risk of the bank, the cost of such a guarantee increases, therefore, it reaches 10% of the agreement price.
• Advance money back guarantee. When concluding a contract, information about the advance payment by the customer is often entered into its text. Its size can even reach 30% of the contract price. Before transferring this amount, the customer requires the contractor to provide a state contract with a bank guarantee. In this case, it is guaranteed that the fundsreceived by the contractor will not be spent on unnecessary purposes. If it is established that the money was directed to other purposes that were not agreed in advance, then the bank covers the losses of the customer.

Therefore, you should first decide what type of guarantee the contractor needs.

Terms of registration

Each bank offers its own conditions when issuing a bank guarantee to secure the contract. Requirements may vary slightly, but by default they are as follows:

• if the performer violates the terms of the contract for various reasons, the beneficiary can apply to the bank for material compensation;
• it is the bank that pays the refund, after which it turns to the contractor to recover the lost amount;
• to provide a guarantee, a banking institution must be confident in the performer, therefore, it carefully checks it beforehand;
• there are different requirements for the size of the company, its authorized capital, duration of operation and the presence of various tangible assets.

The cost of a guarantee can vary significantly from bank to bank. In large institutions, customer verification takes quite a long time, and performers also have to spend quite a lot of money to pay for this unusual banking service.

Cost

Amount of security for the performance of the contract, according toFederal Law No. 44, may be different, since each organization uses its own unique tariffs. The amount of remuneration is influenced by various factors, which include:

• amount specified in the agreement;
• financial position of the principal represented by the executor, therefore, the bank employees without fail conduct a thorough check of their client before issuing a guarantee;
• warranty period.

According to Federal Law No. 44, the commission is set as a percentage, but there are limits, so the cost of a banking service varies from 0.5 to 30% of the contract value. As a standard, banks charge a fee equal to about 3% of the contract price.

What information is in the document?

Providing a bank guarantee to secure the performance of a contract consists in the transfer of certain documentation to the customer. The following information is included in this document:

• the main purpose of the concluded contract;
• information about the participants in the transaction, provided by the name of organizations, their details and legal addresses;
• contract amount;
• period during which the contract is valid;
• obligations that appear for each participant after signing the agreement;
• guarantee issue date;
• document registration information.

Each such document is registered in a special register of banks. The procedure is carried out within two days after the issuance of the guarantee. You may make any changes to this documentation if younecessary, but they must be registered.

Procedure for obtaining a banking service

Any company participating in various government tenders or auctions should understand how to obtain a bank guarantee to secure a contract. In any case, the customer will need it. The procedure for issuing this bank service is divided into the following stages:

• Initially, there is a need for a guarantee, and this is usually due to the fact that a certain executing company wins the tender, so a guarantee is required when making contact with the customer;
• the customer sends the winner a special appeal in writing, which indicates the request to issue a guarantee, and additionally lists its conditions, the amount of remuneration and other requirements;
• the banking institution offering the corresponding service is selected;
• documentation related to the contract and the work of the executing company is transferred to the bank;
• specialists of the institution check a potential client to determine the amount of their remuneration and other conditions of cooperation;
• an official contract is being prepared and signed, and it is desirable that the executing firm use the help of a lawyer to assess the legal purity and effectiveness of this transaction;
• the agreement specifies the amount of remuneration, the duration of the guarantee, as well as the rights and obligations arising from each participant in the process;
• guarantor isa written obligation stating that he will transfer funds to the beneficiary if the principal does not fulfill his obligations under the agreement.

The procedure for issuing a bank guarantee to secure a contract is the same in many banks offering this service. The differences are only in the content of the immediate document.

How are payments made?

If, during the implementation of the transaction, the principal really cannot fulfill the requirements of the agreement or becomes a debtor at all, then it is the bank that will have to pay monetary compensation to the beneficiary.

To do this, the customer draws up a written appeal to the guarantor, in which he requires the fulfillment of obligations under a previously issued bank guarantee. The Bank checks the reliability and relevance of these requirements, after which it transfers the required amount of funds to the customer. It is at this point that the warranty is considered to have expired. But at the same time, the bank has the right to apply to the client for the return of the lost amount.

How to issue a bank guarantee to secure a contract?

If a company wins a competition or tender, then it needs to issue this guarantee. To do this, it is important to initially decide on a banking institution. These services are offered by different banks that charge different amounts from their customers.

Once a bank is selected, the following actions are performed:

• fill out an application,moreover, the process can be carried out not only when visiting a bank branch, but also on its official website;
• next you need to wait for a call from a bank employee who will clarify the details of the guarantee;
• preparing a package of documents required for verification by bank employees, and they can be sent by mail or via electronic communication channels;
• an agreement drawn up by banking lawyers is being studied, and it is advisable to entrust its verification to a professional;
• if there are no problems, the contract is signed by both parties;
• Paying a commission for bank services.

After completing all the above steps, the bank prepares a guarantee in the form of a written document. It is handed over to the client personally in the hands of the department of the institution or sent by mail. Some banks even provide an electronic version of this document.

If the representative of the executing company understands how to get a bank guarantee to secure the contract, then he will not encounter any difficulties. You can apply for this service in different institutions, but most often enterprises prefer to cooperate with Sberbank.

Design options

In Sberbank, a bank guarantee to ensure the performance of a contract can be issued in different ways, and the same methods can be applied by other banks. Conventionally, three design options can be distinguished:

• Classic version. It is used if you need to issue a guarantee for a fairly large amount. This method is usually chosen if, under the contract, the contractor receives more than 20 million rubles for his work. Banks devote quite a lot of time to assessing the financial condition of the enterprise. Additionally, this method is used by banking institutions that do not offer too many programs to their clients, and also do not have the ability to promptly consider client applications.
• Expedited review. This option is not offered when issuing a bank guarantee to enforce commercial contracts. It is used only for enterprises that are winners in public tenders. For them, special programs for accelerated consideration of the application are being created. As a result, the guarantee is issued literally 5 days after the application is submitted. But the amount under the contract should not exceed 10 million rubles, and the bank charges a significant commission for such registration conditions.
• Electronic guarantee. Documents under such conditions are provided in electronic form. They are certified by digital signature, and this method of registration allows you to save a significant amount of time. The bank client does not have to collect too many documents, and the guarantee is issued literally within 4 days. The disadvantages of such registration include a high commission, and the amount under the contract should not exceed 5 million rubles.

The choice of a specific design option depends on the amount of the contract and other conditions.

Specific bank requirements

Irrevocablea bank guarantee for securing contracts may be provided under certain specific conditions imposed by banking institutions. Clients are warned about these conditions in advance. These usually include:

• Giving a deposit or opening a deposit. Such a requirement is quite rare, but sometimes, when the condition of the client company is not considered too satisfactory, banks resort to this method to reduce their own risks.
• Opening a current account with a guarantor bank. This requirement is mandatory for many banking institutions. Banks do insist that clients who are contract executors open an account with the organization before receiving a guarantee. Usually such a requirement is mandatory if the amount under the contract exceeds 10 million rubles.
• Guarantee of other businessmen. To reduce risks, banks require clients to attract guarantors. They must be the owners of their own business, and the company must work for more than a year and make a good profit.

If the client does not meet the requirements of the bank for various conditions, the institution may refuse to issue a guarantee.

What documents do I need?

For issuing a bank guarantee, the executing company prepares the following documentation:

• application in the form of the selected banking institution;
• statutory documents;
• order to appoint a director to his position;
• power of attorneypersons who represent the interests of the enterprise;
• accounting statements for the year of operation;
• contract requiring collateral;
• if the company operates in a specific area of activity, then an additional license is required.

All these documents are carefully checked, so if any violations or problems are found, the bank refuses to issue a guarantee. For example, in Sberbank, a bank guarantee to ensure the performance of a contract is issued only to companies that can prove their solvency and stability. The security service conducts a thorough check, so really all the problems that the company has are revealed.

Design benefits

Using a bank guarantee has many benefits for any company. These include:

• there is an opportunity to conclude really large contracts;
• do not have to withdraw from circulation a large amount of funds that can act as collateral;
• on applications, banks usually make decisions fairly quickly;
• no need to prepare too much documentation;
• commissions are considered affordable for many companies.

The application procedure has many similarities with the process of obtaining a regular loan.

Validity of the bank guarantee for contract security

This period exceeds the term of the contract by at least one month. This condition is spelled out in Federal Law No. 44. The customer may demand an increase in this period, but reduce itcan't.

Sometimes this period ends not after the completion of the work carried out by the contractor, but after payment for these works. At the same time, information about the guarantee must be included in a special register of banks. Any state body or participants in the transaction can study the information about this document.

Conclusion

Bank guarantees for the performance of contracts can be presented in several forms. They have numerous benefits and are also only issued to companies that meet different bank requirements.

It is the guarantor who will cover the customer's losses if the contractor fails to fulfill his obligations. But the contractor will have to return this amount to the bank.