Trade Guarantees is financing that facilitates the conduct of business, by mitigating, or reducing, the risks involved in trade. This mode of finance provides the credit, payment guarantees and insurance needed for the merchandise or service terms that will satisfy both parties. Premier Credit Guarantees the following trade guarantees products:
- Bid Bonds
- Performance Bonds
- Advance Payment Bonds
A bid bond is a written guarantee from a third party guarantor submitted to a principal together with the bid.
In Uganda, most public institutions safeguard their tendering process by requesting for a guarantee, of financial compensation, should the bidder not comply with their obligations. Therefore, in order to participate in the bidding process of a tender, an individual/organization is required to present this assurance of their capability to proceed with the contract – as detailed in the proposal. The bid bond is submitted in the individual/organization’s tender advertisement.
Indirectly, it also ascertains that the bidder will secure the subsequent performance and advance payment bonds; that are required after winning the bid.
- Application letter fully signed
- Certificate of business registration/certificate of incorporation
- PIN of the company
- Directors’ copies of ID and PIN
A Performance bond is a written guaranty from a third party guarantor submitted to a principal by a contractor upon winning a bid.
This guarantee is issued to safeguard institutions against the awarded contractor not abiding and/or performing as per terms of the contract. Therefore, a performance bond acts as some assurance of a contractor’s capability to complete a job as per the specifications of the contract and only the tendering entity can make claims against it in the event of the contractor’s default in meeting their contractual obligations
In the event of a default, then a claim under the guarantee mandates the issuer to financially recompense the beneficiary the face value of the performance bond.
Advance Payment Bond
An advance payment bond (“APB”) is a guarantee, supplied by a party receiving an advance payment to the party advancing the payment.
While proceeding with a contract, the awarded individual/ organization may require advance payments in order to fulfill the terms of the contract satisfactorily. The bond guarantees that the advanced sum will be reimbursed if the agreement under which the payment was made cannot be fulfilled. This bond, therefore, is submitted prior to the release of funds and only the tendering entity can make claims against it. A claim under the guarantee mandates the issuer to financially recompense the beneficiary the face value of the advance payment bond.
Performance bonds/ Advance payment bonds
- Application letter from the customer dated applying for the facilities
- Bank account statements for the last 6 months
- Audited financial statements for the last three years
- Copies of PIN certificates for each of the two directors
- Copies of ID/Passports of the directors
- Copy of Memorandum & Articles of Association of the company
- Copy of certificate of registration of the company or business name
- Copy of PIN certificate of the company
- Copy of Notification of Award letter
- Copy of Company profile (Customer)
- Copies of previous LPOs/Contracts serviced
- Copies of previous/current payment certificates, invoices