What is a Bank Guarantee? A Bank Guarantee involves a financial institution providing a guarantee that a debt will not go unpaid.

A bank guarantee is a form of credit by which your bank guarantees, on your behalf, the payment of an amount to a beneficiary (who then acts as a third party). It is proof of your solvency for this beneficiary (eg a supplier).

Honour payment to your beneficiaries upon receipt of a claim

A bank guarantee is a promise from a bank or other lending institution that if a particular borrower defaults on a loan, the bank will cover the loss. Note that a bank guarantee is not the same as a letter of credit.