Performance bond or guarantee

A Performance Bond or Guarantee is commonly used in the real estate industry to ensure that a contractor successfully completes a designated project. This bond is issued by a bank, insurance company, or financial institution on behalf of the contractor (applicant) in favor of the beneficiary, providing assurance that the contractor will meet their obligations as outlined in the contract. If the contractor fails to fulfill the terms of the agreement, the beneficiary can claim compensation under the bond to cover the costs or damages resulting from the contractor’s default.

How to Get Performance Bond

Performance Bond Providers in Dubai – We are here to support your exports or projects by providing a Performance Bond on behalf of the seller or contractor. To apply for MT760 from rated banks, follow the simple steps below:

  1. Submit the Request: The client submits their MT760 request along with the pro forma invoice or contract for their deal.

  2. Deal Analysis: We analyze the trade deal between the parties involved. If the request is approved, the client will need to sign the service agreement and pay admin charges to begin processing the bond request.

  3. Structuring the Transaction: Upon approval, we begin structuring the transaction by blocking our bank limit.

  4. Bond Draft: We send the Performance Bond (PB) draft for the client’s approval and inform them of the PB issuance fee charges.

  5. Issuance: Once the draft is approved and the issuance fees are received, we instruct our bank to issue the Performance Guarantee from our account on behalf of the client. Our bank will then transmit the required bond to the counterparty’s bank account via SWIFT MT760.

What is a Performance Bond?

A Performance Bond, also known as a Performance Guarantee or Surety Bond, is a bank instrument issued on behalf of a client to assure their commitment to perform as per the terms of a contract or trade deal.

In the construction industry, contractors provide this bond to the project owner, ensuring that the work will be completed successfully and on time. If the contractor defaults, the bond protects the project owner against financial loss or delays.

The Performance Bond also plays a key role in trade. Sellers provide this bond to their buyers as assurance that goods will be supplied upon the buyer’s confirmation via a DLC MT700. The issued bond MT760 acts as a guarantee that the seller will fulfill their commitment.

While obtaining such bonds from banks can be challenging (due to the requirement to block 100% cash funds), we, as Performance Bond Providers in Dubai, are aware of these challenges and offer a solution. We provide the required MT760 without the need to block cash funds, easing the process for you.

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How Do Performance Bonds Work?

When entering into a contract or trade deal, contractors or sellers are often required to provide a Performance Bond. This bond assures the project owner or buyer that the contractor or seller is committed to completing the task on time and according to the terms of the contract. Additionally, the bond ensures that in the case of any default by the contractor or seller, the counterparty can claim the bond.

The Performance Bond offers full protection to the project owner or buyer by ensuring that the work or supply will not be affected, even if the contractor or seller faces financial issues such as bankruptcy or other obstacles that may prevent them from completing the task.

Since the Performance Bond offers crucial protection against defaults, having this guarantee is often one of the key documents needed to secure contracts and trade deals.

Performance Bonds in Construction Contracts

In construction contracts, Performance Bonds are particularly common. For example, when you win a bidding process, the project owner may require you to provide a Bank Guarantee MT760 before starting work on the project. This serves as a guarantee of your performance and provides protection for the project owner in case of default.

Typically, contractors will request a Bank Guarantee (BG) MT760 from their bank. The bank will only issue the BG if the contractor has available bank facilities or sufficient funds to be used as collateral. If a contractor faces difficulty securing the required funds to block for the bond, they can reach out to us for assistance.

To apply for MT760s, simply submit your requirements [here](Integrate the word “here” to contact details/Enquiry Form). Our process is simple, and if you have all the necessary paperwork and pay the charges promptly, we can complete the issuance process in as little as 2 working days.

Parties Involved in BG MT760

The Performance Bond (BG MT760) involves three key parties:

  1. Principal (Contractor or Seller) – The party requesting the bond to guarantee their commitment to completing the project or supplying goods on time.

  2. Obligee (Project Owner or Buyer) – The party receiving the bond, ensuring the contractor or seller will fulfill their contractual obligations.

  3. Bank – The financial institution that issues the bond, guaranteeing that the contractor or seller will perform their tasks as per the agreed terms.

How Much Does a Performance Bond Cost?

The cost of a Performance Bond can vary depending on the duration of the required bond. The cost typically includes:

  • Bank commissions

  • Processing fees

  • Handling charges

These charges are typically borne by the client, and the bank will deduct them from the applicant’s account before issuing the bond.

Performance Bond Providers in Dubai

At Silver Stone Consultancy, we specialize in providing Performance Bonds in Dubai, helping clients globally obtain these bonds without needing to block cash funds. With over 16 years of experience, we have successfully assisted more than 25,000 traders and contractors in securing their trade deals and contracts.

If you need a Performance Bond to guarantee your commitment to a counterparty, reach out to us today. We can issue the Performance Guarantee on your behalf, providing the security you need to proceed with your contracts and trade