Guarantees / foreign currency guarantee
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More information about Guarantees / foreign currency guarantee
Liability for a guarantee loan
Credit guarantees are also often used in the construction industry. Especially when it comes to paying penalties. Contractual penalties are always payable if the entrepreneur has failed to complete the construction project at a certain time. In a construction project, the contractor usually has to make an advance payment. This will be particularly bad for a contractual penalty, because the project will be paid only after completion of construction.
Liability for a guarantee is shared. On the one hand, the bank is in liability as a lender and, on the other hand, the legal entity that has received the guarantee. But only if the claims can not be repaid by the borrowing company, the bank or the bank must take over the financial performance. Therefore, this loan becomes a liability for the bank only if the debtor can not provide his contractually agreed services.
The term avallo comes from the Italian and means as much as guarantee or guarantees. And that is exactly the purpose of a guarantee loan. The point is not that the bank or the lender should give money, but that the payment of the sum should be guaranteed. A guarantee also exists in the private sector, whenever the bank requires a guarantor for a loan. Again, the guarantor is not the debtor of the bank, but only if the borrower fails or is no longer able to service his loan.
Importance in foreign trade
Very often, the guarantee loan is used for foreign trade. Here you can often work with guarantee credits, for example, to secure a down payment for goods. Such a guarantee can be demanded from an authority or even from a private company. Credit guarantees, for example in emerging markets, are usual. In China, almost nothing goes without a guarantee. The term guarantee credit stands not only for financial benefits, but for all guarantees and guarantees that arise during a business. Especially when doing business abroad, you should therefore look at the contracts very closely, because a guarantee can have very far-reaching consequences. We are happy to advise you.