As Nordea's corporate customer apply for a bank guarantee directly in netbankOpens new window.
If you are not yet a Nordea Business user, you can apply for a bank guarantee for companies by filling in a corporate financing application and sending us the signed application form for bank guarantee below via our Omaposti service. We will contact you after we have processed your financing application and received the signed application form.
A performance bank guarantee, i.e. a contract bond, ensures that the work performance or procurement agreed on by the contractor or developer will be implemented as agreed on. A performance bank guarantee is also called “contract bond during construction”. The guarantee is valid until the end of the construction period and the usual security deposit is around 10 per cent of the contract price or procurement price.
A rental security deposit is provided for the landlord as security for the rental payments and other obligations laid down in the tenancy agreement. An amount equalling three months’ rent at maximum is considered an appropriate rental security deposit.
An advance payment guarantee may be issued when the contract price or a part of it is paid in advance. The purpose of this guarantee is to secure the refund of the advance payment received by the customer in full or in part to the constructor/client if the work or delivery is not performed in accordance with the contract. Thus with an advance payment guarantee you can obtain more favourable payment terms for your contract.
A bank guarantee and pledging funds in your company’s account are alternative ways to secure the performance of a contract. Compare the options and choose the best one for you.
| Bank guaranteeBank guarantee | Pledge of fundsPledge of funds | ||
|---|---|---|---|
| FeaturesFeatures | |||
| Digital application form in Nordea Business Digital application form in Nordea Business | |||
| Digital application form in Nordea Business Digital application form in Nordea Business | Digital application form in Nordea Business Check Mark Yes | Digital application form in Nordea Business Check Mark Yes | |
| Ties up your company’s funds Ties up your company’s funds | |||
| Ties up your company’s funds Ties up your company’s funds | Ties up your company’s funds Check Mark No | Ties up your company’s funds Check Mark Yes | |
| Expires automatically Expires automatically 1 No arrangement fee is charged on guarantees issued within a bank guarantee limit. [1] | |||
| Expires automatically Expires automatically 1 No arrangement fee is charged on guarantees issued within a bank guarantee limit. [1] | Expires automatically Check Mark Yes | Expires automatically Check Mark No | |
| Requires collateral Requires collateral | |||
| Requires collateral Requires collateral | Requires collateral Check Mark Yes | Requires collateral Check Mark No | |
| PricingPricing | |||
| Fixed fee Fixed fee 2 No arrangement fee is charged on guarantees issued within a bank guarantee limit. [2] | |||
| Fixed fee Fixed fee 2 No arrangement fee is charged on guarantees issued within a bank guarantee limit. [2] | Fixed fee - Arrangement fee starting from EUR 400 | Fixed fee - Opening fee EUR 100–300 | |
| Annual commission Annual commission | |||
| Annual commission Annual commission | Annual commission - Calculated for each customer individually | Annual commission Check Mark No | |
| Other expenses Other expenses | |||
| Other expenses Other expenses | Other expenses - Service fee starting from EUR 145 | Other expenses Check Mark No | |
1. The automatic expiry date of a bank guarantee is set on a case-by-case basis. When you pledge funds as collateral, the pledgee’s approval is always required to release the funds.. The automatic expiry date of a bank guarantee is set on a case-by-case basis. When you pledge funds as collateral, the pledgee’s approval is always required to release the funds. 2. No arrangement fee is charged on guarantees issued within a bank guarantee limit.. No arrangement fee is charged on guarantees issued within a bank guarantee limit. | |||
A bank guarantee functions as security in many kinds of contracts. For instance, it may be issued as security for a delivery, a guarantee period, a contract price payment, a rental payment for business premises or for compliance with some other contractual obligation. Your company may also use a bank guarantee to meet its statutory security obligations.
Bank guarantees help in financial risk management especially in the case of major projects and new contracting parties. The advantage of a bank guarantee is that you don’t have to prove to your partner your company’s creditworthiness or ability to meet the obligations laid down in your contract.
By offering your contracting party a bank guarantee from Nordea you can prove to them that they are dealing with a reliable counterparty. You can also require a bank guarantee from your contracting party if you want to be sure that your partner will be able to fulfil the contract terms and conditions.
In domestic trade, a guarantee as for one’s own debt is mainly used. A guarantee as for one’s own debt means that the guarantor bank has the right to refuse to pay compensation to the beneficiary before finding out what the guaranteed party’s payment obligation is.
In international trade, an on-demand guarantee is usually used. An on-demand guarantee means that the bank is obliged to effect payment to the beneficiary against a payment claim in accordance with the terms and conditions of the on-demand guarantee, without any right or obligation to find out what the obligation of the guaranteed party is to compensate the beneficiary.
You can also require a bank guarantee from your contracting party if you want to be sure that your partner will be able to fulfil the terms and conditions of your contract. The guarantee provides you with protection in your business especially when you do not yet know your contracting party very well. A bank guarantee serves as safe and reliable security for both parties.
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