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.