1, one is a bank guarantee issued without deposit, which will be invalid upon expiration.

2. One is the bank guarantee issued after paying the deposit, which is returned to the bank, and the bank returns the deposit paid by the customer before.

Performance guarantee refers to the performance guarantee commitment made by bank financial institutions to the project owner (beneficiary) at the request of workers and contractors (applicants). In the future, if the labor service provider and the contractor fail to complete the undertaken projects on time, in good quality and in good quantity, the bank will pay the owner a sum of about 5%~ 10% of the contract amount. The performance bond has certain format restrictions and certain conditions.

Extended data:

operation sequence/order

The applicant applies to the bank to open a letter of guarantee and provides relevant information;

Banks conduct investigations and reviews;

Sign an agreement to implement the deposit or counter-guarantee;

Issue a performance bond.

application area

The scope of application is very wide, which can be used to provide guarantees for the parties to fulfill their contractual obligations in any project, and is often used in engineering contracting, material procurement and other projects.

In engineering contracting, material procurement and other projects, the owner or buyer usually requires the contractor or supplier to pay the performance bond to restrain the other party's behavior, so as to avoid the loss caused by the contractor or supplier's failure to perform the contractual obligations. Performance bond is a good substitute for cash deposit.

Advantages of performance bond

To the contractor or supplier:

Reduce the long-term capital occupation caused by paying cash deposit and obtain capital income;

Compared with paying cash deposit, it can optimize the allocation of limited funds;

Rights and interests are better protected.

To the Owner or Buyer:

Restrict the behaviors of contractors and suppliers reasonably and safeguard their own interests;

Avoid the cumbersome procedures of collecting and returning the deposit, and improve work efficiency.

Performance guarantee (performance guarantee)

Performance bond: it is a written guarantee document issued by the bank to the beneficiary at the request of the applicant to ensure that the applicant performs the obligations under the contract.

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