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Performance Guarantee Bond

Performance Guarantee
Bond Information

Performance Guarantee Bond is a financial tool that acts as a security to guarantee any claim of the importer/buyer towards the exporter/supplier if and when a default occurs in performance of delivering huge merchandise/commodities in accordance with the sales & purchase agreement. As well, Performance Bond/Guarantee is a surety bond issued by a bank or insurance company to guarantee acceptable or satisfactory conclusion of a certain project development by a contractor. The Performance Guarantee or Performance Bond will require having tangible collateral in terms of property or termed deposit to back up the requirements of the issuing bank (provider bank) or Surety Company.

It is normally used in development or construction of different projects, where a proprietor or developer requires the contractor to provide such Performance Bond in favor of them to guarantee their commitment as per the contract signed between them and as well as in case of lack of liquidity of the contractor.

A Performance Bond may be either demand or conditional, which means that the beneficiary/principal may or may not be required to prove default by the principal in order to obtain payment. It is also typically issued as a component of a ‘Performance/Payment Bond’, wherein it guarantees that the contractor will pay the material costs and labor they are obliged to.

Performance Bond guarantees the client that if the contractor fails to complete the project as per the terms & conditions of the construction agreement, the surety company or bank (provider bank) will arrange for a client-approved new contractor to complete remaining work on the project. The new contractor will then be paid for the amount required to finish the work. However, the surety company or bank is not compelled to pay more than the limit of liability mentioned in the bond.

Performance bond or Performance Guarantee generally covers 10 percent of the contract value and replace the bid bond once contract is awarded. Performance Bond is not an insurance policy and can be en-cashed by the principal to recover their payment from the contractor. Performance Guarantee Bonds are always Irrevocable and cannot be cancelled or revoked. These guarantees or bonds can be terminated only when the contractor or a supplier has fulfilled their obligation towards the principal or buyer.

The Performance Guarantee or Performance Bond is transmitted via authenticated swift MT-760 between banks.

Availing Performance Bond or Guarantee from a bank is at times very difficult, time-consuming and blocking huge margin of company’s capital. Bronze Wing Trading L.L.C. as a direct provider knows these issues, thus providing the PB/PG from Top European Banks without blocking cash funds which is very valuable for the supplier or contractor.

Performance Guarantee
Bond Procedure

 To get Performance Guarantee/Bond, please follow the below procedure:


1. Seller/Contractor presents their trade deal requirement by submitting contractual agreement or buy and sell agreement.

2. BWT will do due diligence on the trade transaction between importer/developer & seller/contractor and informs the concerned party if the PB/PG request is rejected or approved.

3. If approved, BWT will ask their client to submit further documents and payment being their PB/PG charges.

4. Upon receipt of documents and PB/PG charges, BWT will proceed right away and will establish the Performance Guarantee/Bond from their bank account with European Bank via authenticated swift MT-760 to the importer/developer’s bank.

Performance Guarantee
Bond Video

To Apply for Performance Guarantee Bond (PG/PB) → Get Free Quote