Bid/Tender Guarantee (bond)
Performance Guarantee (bond)
Advance Payment Guarantee
Payment Guarantee
Retention Guarantee
Standby Letter of Credit

Bid/Tender Guarantee
A bond issued by the bank on behalf of a customer to aid the bidding for a contract. This essentially guarantees that the customer will not pull out of the bidding process.
Benefits
Enables the customer tender for more bids.

Performance Guarantee
An undertaking required by the contract employer or a principal from a contractor as security for their performance. The bond usually states that the contractor has the ability to carry out the job. This is normally issued to cover the duration of the contract.
Benefits
Validates the contract awarded to the contractor.

Advance Payment Guarantee
This is a guarantee issued to enable contractors collect mobilization fees for contracts won. Here the bank becomes liable if after collection of the money, the contractor still fails to execute the project.
Benefits
Enables the customer to make necessary preparations for initial start-up of project.

Bank Payment Guarantee
This is an undertaking or an agreement where the bank agrees to be liable for the debt of a customer to a third party or beneficiary on default.
Benefits
Boosts the customer’s turnover
Relief of working capital.

Retention Guarantee
An undertaking by the bank to the Contract Employer, which enables the contractor (the Bank’s client) collect the funds that ordinarily would have been withheld by the Contract Employer for a specified period to take care of any flaws/defects on the project/contract executed
Benefits
Avails the contractor with the required 10% retention so as to move on to other projects.
Avails the contractor with working capital earlier than expected

Standby Letter of Credit
This is a type of guarantee that supports a customer’s obligation under a contract. In the event that the customer fails to comply under the agreed contract on the StandBy LC, the Bank pays the Beneficiary upon compliance with the terms of the LC.