Performance Bond | Performance Bank Guarantee | Surety Bond (2024)

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Surety Bond Issued for a Spanish Contractor

A Surety Bond worth of USD1.5 M was facilitated by BWT, the BG Providers in Dubai to assist the contractor in signing the new building construction project with the project owner. We issued the required MT760 through the help of our own Bank Account with an international repute bank in Europe.

How Does a Performance Bond Work?

Usually, when it comes to construction contracts or trade deals, traders & project owners prefer to work with the one; who can provide a required assurance in terms of completion of a specific task or the supply of goods.

Having a Performance Bond protects the buyer or the project owner against the risk of the contractor or seller. In case, if they fail to comply with the agreed terms. Also, it assures the positive completion of work within the stated deadline; also, within the allotted quote. Since contractors & sellers are giving these assurances towards their counter parties; it makes them more appealing in the bidding process. And, this, in turn, increases their chance of winning the bidding contest; also signing worthy contracts and trade deals.

How to Qualify for a Performance Guarantee?

Are you looking to get a PB MT760 to assure your performance towards your counterparties? There are 2 options available – Either you can get help from banks, or get help from private trade finance providers.

If you contact banks to avail MT760, then they may demand you to block a certain percent of the bond value as cash margin in your account. But for contractors whose working capital is tied up with some other business, it’s difficult to meet the demands of the bank.

That’s why, we, the Bank Guarantee Providers in Dubai are here to help you. By blocking our own bank limit available with European Banks; we, not only provide – Construction Bond; but also provide – Advance Payment Bond, & Bid Bond without blocking your working capital.

To check whether you’re qualified for availing Guarantees from us, submit your request to us now!

Performance Bond in Construction Contracts

Performance Bond Construction is mostly used in construction projects to assure commitment as per the agreed contract. Further, this bond assures the completion of the work; even in case of lack of cash flow or bankruptcy of the contractors.

Usually, BGs are issued on first written demand. This means, if there is any default by the contractor, then the project owner can claim the Surety Bond to get the compensation required. Further, in order to claim the payment; the project owner may or may not be required to prove the default of the contractor.

In case of contractor default, a new contractor will be hired by the bank with the consent of the project owner; to complete the pending work. In such a case, the contractor needs to bear the cost to complete the pending work of the project. Also, this includes costs and labor charges. Further, the bank will pay the new contractor the amount; they spent to complete the work.

Performance Bond Value

All contractors are likely required to provide a Bank Guarantee when they are signing a new project or contract. When you submit a bid for a new project; the project owners can’t able to figure out the exact cost required to complete the project. And so, it would be difficult to provide the cost that covers the bond value.

As a rule of thumb, the bond value covers normally 10% of the contract value. Thereupon, it replaces the tender bid, once the contract is awarded and the Performance Bonds are issued. Moreover, this bond is always Irrevocable; that means it cannot be canceled or revoked. Also, it can terminate only; once the contractor has fulfilled all their terms towards the principal party.

Parties Involved in Bank Guarantee

• Seller or Contractor – The one who requests their bank for MT760; to prove the positive completion of the work or trade deal.

• Buyer or Project Owner – The one who receives the MT760 in their favor.

• Bank – The one who stands as a guarantor; by assuring that the contractor or the seller will fulfill the terms; as per the contract.

Benefits of Bank Guarantee

For Developers / Buyers:

• Assures contractors / sellers will adhere to the terms as per the surety bond.
• Serves as a warranty against low-grade work / supply.
• Make contractors / sellers accept their fault; if it occurs while performing the job / supplying.
• Also, it ensures that everyone involved in the project gets paid; even if there any defaults occur.

For Contractors / Sellers:

• Assures that the contract will be honored.
• Assures the positive completion of the project; also the supply of goods.
• Also, it serves as a surety for the project owner and buyer; in case of default.

How Much Does a Performance Bond Cost?

The cost of a Performance Bond usually includes bank commission, swift charges, and also other handling fees. For instance: it includes the charges for credit reports and so on. Further, if you have any queries in regard to the cost; you can send us your query and our team will assist you.

Performance Bond Providers in Dubai

For contractors & sellers, getting a Payment Bond from their banks seems to be a daunting task; as it blocks a huge cash flow of the company. We, the Performance Bond Providers in Dubai understand the problem faced by contractors & sellers. As a result, we provide MT760 from our own rated bank accounts by blocking our own bank limit. Therefore, there is no need to block any cash funds to get the bond issued.

By choosing us, you’ll get:-

• Fast and prompt service.
• Deal close in 48 working hrs.
• Partnered with rated banks.
• Also, expert guidance throughout the process.

Are you in the construction field? Gearing up for a new project? Certainly, the project owner will require a Guarantee Letter to ensure that you can complete the job without any default; if assigned. So, get Bank Guarantees from us and get ready to sign worthy contracts!

Submit your Performance Bank Guarantee Performance Bank Guarantee Request & Get MT760 issued within 48hrs!