Guarantee brokerage

In our second core area of business “bonds and security deposits”, we assist companies and groups in the field of guarantee brokerage. Our experienced team is happy to be at your service to provide you with the best possible solutions for your business, tailored to your specific needs.

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Guarantee loans

What is a guarantee loan?

A bank guarantee or guarantee loan is a bond or surety which a bank grants to a third party on behalf of a debtor. The structure of a guarantee loan agreement is similar to that of a normal loan contract. However, the contract focuses on the assumption by the bank of a contingent liability. This means that the guarantee loan is a guaranteed payment promise issued by the bank. It is usually issued against payment of a guarantee fee.

What are the advantages of a guarantee loan?

The most important advantage of a guarantee is that the lender is not required to use liquidity, as no deposit of funds is required. The lender only pays the guarantee fees. For years, bond insurers have had a different approach than banks. Banks are required to deposit equity for guaranteed loans just like for any other loan (BaFin). The client receiving a bank guarantee will usually not need to provide collateral. The insurance companies, just like banks, calculate the probability of insolvency; however, they then combine it with their own default statistics for the various types of guarantees. This results in fundamental differences regarding the valuation of the collateral which you as an enterprise will have to deposit.

What types of guarantees are there?

Prepayment guarantee: Secures a prepayment made by a customer.
Contract performance guarantee: Secures claims relating to the performance of contracts and claims for damages.
Security for construction companies pursuant to section 650 et seq. of the Civil Code (BGB): Protects the supplier, because ownership in materials that are incorporated into a building passes to the property owner and such material can no longer be removed by the supplier if the customer fails to pay the consideration.
Performance guarantee: Provision of collateral up until full performance or receipt of goods.
Warranty guarantee: Secures an investor’s or owner’s warranty claims.
Rental guarantee: Secures a rental contract through a bank guarantee instead of a deposit.
Litigation guarantee: Can, for instance, be used in proceedings relating to the enforced auctioning of real estate.
Bill of exchange guarantee: Improves the creditworthiness of bills of exchange.
Customs guarantee: Guarantee provided through a suitable tax guarantor.