Practically – every second person in Poland repaid at the end of June 2018 a liability in the form of a loan or a loan. The most numerous group were professionally active Poles, in the range of 35-44 years. One in four (25.55%) of them is repaid credit. At least this results from the data provided by the Credit Information Bureau . The sum of all liabilities is almost 29 million, the amount of over 608 billion of wit 1 ! This financial structure clearly highlights the fact that we have confidence in banks. How to strengthen them even more while running your own business? In such cases, the concept of a bank guarantee emerges – what is it and when is it worth using?
According to the Banking Act of August 29, 1997, the bank guarantee covers a unilateral obligation of the bank-guarantor that after all the conditions for payment by the borrower (the beneficiary of the guarantee) have been met, he will perform a cash payment against it – directly or through the other bank. In practice, this means that when the debtor has problems with the timely repayment of installments – the institution will take over the payment of the benefit. However, in order for this to happen – the borrower must pay a commission to the bank that will settle the entire debt in case of financial problems. Its amount is usually 0.5-1.5 percent. sum incurred.
This is precisely defined in art. 81 of the Banking Law:
What is important – a bank guarantee is a contract in which only the bank can become the guarantor. Hence the name of the term. In turn, the beneficiary has the right to be practically anyone – both a natural person and an entrepreneur engaged in domestic and foreign trade.
However, most often – a bank guarantee is used when establishing cooperation with a new business partner. In this way, it secures various types of debts of a major investment character, requiring a large amount of finances. Therefore, it is impossible to omit the following advantages:
We live in a very dynamic society – we receive signals every day about the ongoing economic changes. We hear about redundancies, an increase in the unemployment rate or about payment bottlenecks. It is also loud about consumer bankruptcy – in 2018 alone it was announced by 1/5 more enterprises than it was in 2017 and three times more than in 2015. According to the BIK and BIG “InfoMonitor” research over 6.5 thousand people who went bankrupt last year had unpaid liabilities totaling PLN 732 million 3 !
It is no wonder that the guarantee guarantee has a wide range of applications. It can be used not only to regulate the amount of goods purchased or services provided, but also applies to financial transactions that will be carried out only in the future. Bank guarantees also apply in the situation of:
Once we know in which cases a bank guarantee is used, it is worth stopping over its various types. Taking into account the formalities necessary to perform for the bank, we distinguish two types of guarantees:
– conditional banking guarantee – the bank pays the borrower funds only if it meets all the terms of the contract. Therefore, the creditor checks whether the monetary claim is in fact valid and the beneficiary has submitted all documents that can confirm it,
– unconditional bank guarantee – the bank pays the borrower the entire amount – without checking the validity of such a decision and not requiring submission of any supporting documents.
Importantly – all warranty obligations are conditional! Which means that the laws that bind them may or may not be enforced. Therefore, the payment transfer will take place only when the beneficiary reports to the bank demanding payment – it is not guaranteed by the guarantee itself! The warranty automatically expires later. It has a specific duration – and all the rights it contains can only be completed by the specified deadline.
Apparently – “not everything gold, what is shining” – so in the case of a bank guarantee there is no crystal clear side, free of defects. On closer acquaintance, there are certain risks associated with it, which mainly determine costs. In the case of this type of protection, we often have to reckon with:
In addition, to ensure that the guarantee itself is indeed a good solution for the beneficiary – the bank will definitely scan the potential customer in terms of creditworthiness . It will also be necessary to meet other conditions, such as setting up an account or submitting a contract security, for example in the form of cash or mortgaged property. After positive verification and when the bank sees no obstacles, you can sign a bank guarantee only in writing! All methods of verbal guarantee – in the light of the law are invalid!
First of all, its content must be transparent and understandable for both parties to the contract. So that no sub-point raises any doubts as to its interpretation. Therefore, it must include:
In this case – many people are often equated these two concepts as one and the same financial product. Indeed – both in the guarantee and in the guarantee, the beneficiary is protected against insolvency. And the similarities end there. The key difference between them is the hedging entity – in a bank guarantee, as the name suggests, it is a bank, in turn, it can be a natural person. In addition, the bank guarantee:
A bank guarantee is an increasingly willingly used financial instrument – especially among entrepreneurs who strive to secure their interests. What’s more – sometimes you get the impression that this product is increasingly supplanting other ways to protect your business.
No wonder – firstly – guarantees the creditor’s security in the event of the debtor’s insolvency, and secondly – increases the credibility of the beneficiary in the eyes of the contractor. And thirdly – it does not require the involvement of own funds, thanks to which the company’s financial liquidity is maintained. Therefore, such a way of financing should have in mind – small and medium enterprises that think about non-standard solutions and the development of their activities.