Helping clients derive competitive advantage

Funding on
Corporate Guarantee

Helping clients derive competitive advantage

Funding on
Corporate Guarantee

by admin
Funding via Corporate Guarantee method is a flexible of financing where a borrower may have little or restricted collateral to open new, or to extend existing credit facilities. Corporate Guarantee transfer allows the borrower to effectively import assets of the Provider to their temporary owner ship and use the same as security for credit lines and funding, or for enhancement of existing credit lines.

How it works?

The facility is governed by DOA is bespoke to the specific transaction. This Agreement binds the Provider to issue the Guarantee to the Beneficiary for the given term and binds the Beneficiary to accept the Guarantee and to pay the contract fee to the Provider for its use. It is of course known to all parties that the Beneficiary will use the Guarantee to raise credit and will therefore encumber the Guarantee, i.e., the lending bank will lien it as security. This is referred to as Monetization of the Guarantee. This if of course acceptable to the Provider, the Beneficiary will need to make a declaration that they adhere to remove any encumbrance over the Guarantee 5 days prior to the Guarantee expiry date.

Therefore, the Beneficiary must make his own arrangements with his bank to repay any loans secured on it. Otherwise the Beneficiary will be in breach of DOA and will have to invite consequences from the Bankers. This is referred to as the “Exit Strategy”. i.e., how the Beneficiary will exit the contract and repay the debt secured on the Guarantee.

Key Benefits of the Service

Corporate Guarantees are available for lease from $10 Million to $100 Million per contract. Amounts over $100 Million can be achieved by entering multiple contracts.

Guarantee is of course limited and a provider will only offer to their maximum limit which is dependent upon the status of the applicant and current market conditions.

Providers will issue the Corporate Guarantees from International Banks, making them widely acceptable; all Guarantees are issued inter-bank via SWIFT.

Costs of Project Funding

Corporate Guarantee Contract Fees (the annual rental charges) for amounts of $10 million to $100 million, levied by provider’s are commonly between 6% & 8% per annum, depending on the term, amount and current market demand. Multiple Corporate Guarantees will of course attract lower rates.

If the applicant/beneficiary is a new, the Provider may request Proof of Funds or Bank Confirmation Letter (10% in most cases) upon acceptance of their DOA.

If Beneficiary cannot provide the said POF/BCL, BRZEE will help the beneficiary to arrange the fee at additional costs typically 10% on the POF. For Example: If Borrower looking for $15 Million funds, they have to show the Proof of funds for $1.5 Million, If Borrower required this $1.5 Million as Proof of funds from BRZEE, then they have to pay $1,50,000 to arrange the POF.

All costs, procedures and terms are detailed in full in the Term Sheet we provide before the applicant is required to make any financial commitment. There is no obligation to accept Terms once they are offered.s $1.5 Million as Proof of funds from BRZEE, then they have to pay $1,50,000 to arrange the POF.

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