Bank Guarantees
Fast working capital when timing matters
You’ve won the work — now the bank guarantee is standing in your way. Many commercial contracts require a bank guarantee before work can commence. If your bank can’t provide the bank guarantee, or you don’t want to tie up valuable working capital, Hermes Capital may be able to help.
Winning the Work Is Only the Beginning
Winning a contract is a significant achievement. But for many contractors, the next hurdle is arranging the bank guarantee before the first invoice is even raised. Government departments, developers and major contractors often require a bank guarantee as security before work can begin. While the guarantee may only represent 5–10% of the contract value, arranging it can delay mobilisation or place unnecessary pressure on working capital. Hermes Capital works with established businesses that need a practical funding solution to satisfy a bank guarantee requirement and keep projects moving.
Is a Bank Guarantee Holding Up Your Project?
- You’ve secured a commercial contract.
- A bank guarantee is required before work can begin.
- Your bank won’t support the full bank guarantee.
- You’d rather preserve working capital for wages, suppliers and project delivery.
- Timing matters and delays could affect the contract.
How Hermes Capital Can Help With Your Bank Guarantee
Rather than relying solely on traditional bank lending, Hermes takes a commercial view of your business. Where appropriate, we structure funding that supports your bank guarantee requirement, allowing you to meet your contractual obligations while preserving cash flow for the project itself. Every bank guarantee application is assessed individually, taking into account the business, the contract and the commercial opportunity.
Why Businesses Choose Hermes for Bank Guarantee Funding
- Commercial assessment rather than automated scoring
- Fast decisions when timing matters
- Funding structured around your bank guarantee requirement
- Preserve working capital for day-to-day operations
- Experienced commercial finance team
- Ongoing funding support as your business grows
How Bank Guarantee Funding Works
- Discuss the Opportunity — Tell us about the contract, the bank guarantee requirement and your business.
- Commercial Assessment — We review the opportunity and assess the appropriate funding structure.
- Facility Approval — Where suitable, Hermes structures a facility to support the required bank guarantee.
- Project Commences — Meet your contractual obligations and get on with delivering the work.
Case Study – Bank Guarantee Funding in Action
Scenario:
A contractor secured a $2 million commercial project, a significant win for the business.
Before work could commence, the principal required a 10% bank guarantee as security under the contract.
Tying up $200,000 in cash wasn’t a practical option, and the contractor’s bank was unable to issue the guarantee within the required timeframe, putting the project’s start date at risk.
Solution:
Hermes structured funding to support the bank guarantee requirement, assessing the opportunity on its commercial merits rather than relying on traditional bank lending criteria. The streamlined process allowed the facility to be approved quickly, without the contractor needing to draw down working capital.
Outcome:
The contractor met the principal’s bank guarantee requirement, mobilised on schedule, and preserved working capital for wages, suppliers and project delivery. Every business is different, and bank guarantee facilities are assessed on their individual merits.
Bank Guarantee FAQs
What is a bank guarantee?
A bank guarantee is a commitment issued by a bank that provides security to the principal under a contract. If certain contractual obligations aren't met, the principal may be entitled to claim against the bank guarantee.
Why do construction contracts require a bank guarantee?
Many government departments, developers and larger organisations require a bank guarantee to reduce their commercial risk before work begins.
Can Hermes Capital provide the bank guarantee?
Hermes doesn't issue bank guarantees directly - Hermes is not a bank! Instead, once your facility is approved, Hermes provides security on your behalf to one of the trading banks it works with to have the bank guarantee issued by that bank for you.
Can Hermes help if my bank has declined my bank guarantee application?
Every application is different. Hermes assesses opportunities commercially and may be able to structure a solution where traditional lending criteria have become restrictive.
How quickly can Hermes assess a bank guarantee application?
Assessment time depends on the complexity of the transaction and the information provided. Where timing is critical, our process is designed to deliver commercial decisions as efficiently as possible.
What information will I need for a bank guarantee application?
Typically, we'll ask for information about your business, the contract, the required guarantee amount and your financial position. The exact requirements depend on the transaction.
What We Look For in Bank Guarantee Applications
- Hermes assesses each opportunity on its commercial merits, including: the strength of the business
- the contract being undertaken
- cash flow and repayment capacity
- available security
- trading history
Ready to Discuss Your Bank Guarantee Requirement?
Call (02) 9690 0611
Email admin@hermescapital.com.au