Bank Guarantee

A bank guarantee is when a lending institution promises to cover a loss if a borrower defaults on a loan.

The guarantee lets a company buy what it otherwise could not, helping business growth and promoting entrepreneurial activity.

A bank guarantee is a type of financial backstop offered by a lending institution. The bank guarantee means that the lender will ensure that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it.

A bank guarantee enables the customer, or debtor, to acquire goods, buy equipment or draw down a loan.