The benefits
Form of security
It replaces the need to provide other forms of security (such as a cash deposit), as the beneficiary knows they will be paid.
Investment growth
The security (such as a cash deposit) can be invested in an interest-bearing account.
Business growth
As the beneficiary relies on the guarantee, the transaction can proceed.
Business intent
Indicates the business standing of the Applicant as FNB is willing to underwrite their obligations.
Minimal admin
It removes the admin burden of getting the beneficiary to return security that has been provided.
Parties involved
Aimed at building trust
As a minimum, the following parties are involved
Beneficiary
The party who relies on the guarantee as security against the risk of non-performance/default by the applicant
Applicant
The party applying for the issuance of a guarantee to cover the risk of their non-performance/default
Guarantor
The party who issues a guarantee on behalf of the applicant