March 16, 2023
eGuarantee’s Bank Guarantee Alternative
An easier, faster, cheaper and more secure way for commercial tenants and landlords to provide and accept lease security.
It is common practice for commercial landlords to require a tenant to provide ‘security’ at the start of their lease, often to the sum of six to twelve months’ rent. This is used to ensure the contractual obligations of the tenant, with the security being paid to the landlord should the tenant fail to ‘make good’ the commercial premises at the end of the lease.
While bank guarantees and cash security deposits have long been the status quo for providing lease security, eGuarantee’s lease bond solution is a newer, better alternative, offering a number of benefits over the outdated bank-backed method.
What is a bank guarantee?
A bank guarantee is a form of lease security𑁋a bank’s unconditional written undertaking to pay the landlord the total value of the security should the tenant fail to adhere to the terms and conditions of the contract.
Unfortunately, banks often require that tenants secure their bank guarantee by handing over valuable assets such as:
- A large cash deposit
- Residential property
- Commercial property
By demanding large sums of capital or collateral up front, bank guarantees discourage both tenant attraction and retention, negatively impacting renters and landlords alike.
This is where eGuarantee’s bank guarantee alternative stands out as the next step in the evolution of commercial lease security.
The eGuarantee Difference
As the first of its kind to be offered to the Australian and New Zealand market, eGuarantee’s lease bond solution allows commercial tenants and landlords to enjoy superior financial and administrative benefits with all the protection and legal credibility of a traditional bank guarantee.
eGuarantee’s lease bond solution is an unconditional and irrevocable financial guarantee backed by a consortium of the world’s largest global reinsurers, allowing for on-demand security payment in line with the terms of the lease.
Landlord Benefits
- Save money: with no hidden fees, eGuarantee’s bond solution is 100% free for commercial landlords to offer and use.
- Stand out in the market: by cutting out the large upfront cost associated with a traditional bank guarantee and replacing this with a smaller annual fee, eGuarantee’s digital bond solution facilitates improved cash flow via tenant attraction and tenant retention.
- Enhanced security: eGuarantee’s lease bond solution is a completely digitised form of lease security, allowing you to avoid the unwanted exposure of outdated paper authentication. Have peace of mind knowing that your lease securities are safe and secure, stored on an encrypted platform.
- More convenient: as an end-to-end digital solution, eGuarantee’s alternative to a bank guarantee allows you to steer clear of the administrative burden and stress of keeping track of paper bank guarantees. Now you can manage claims and cancellations instantly through a globally accessible online platform.
- Total Transparency: eGuarantee’s bank guarantee alternative allows you to digitise your entire bank guarantee portfolio and integrate it with Lease Management software through an open API for real-time viewing of your lease security.
- Automated processes: with the eGuarantee system, you can now receive advance notice of your lease expiry date, plus automatic upstamping of bond value with rent escalation.
- Guaranteed payment: enter your lease agreement with confidence knowing that even if your tenant goes into administration or liquidation, your claim will be unaffected as the lease security is provided by a reputable third party underwriter.
- Streamlined processes:
- communicate effectively with guarantors, tenants and intermediaries (agents, tenant representatives and brokers) via the eGuarantee online platform.
- accurately identify tenants, guarantors and intermediaries through automated naming conventions based on ASIC records.
- accurately identify properties through automated addressing conventions drawn from the Australia Post database.
- increase productivity by permitting platform access for your asset managers and solicitors.
- share your records and lease agreements with your custodians and trusts.
9. Streamlined property transfer: effortlessly transfer bonds electronically when your property is sold or acquired with a customised template of the terms and conditions of your leases.
10. Better tenant-landlord relationships: start your lease agreement on good terms with eGuarantee by providing flexible security options and financial relief for your tenants, saving them from having to pay large upfront costs or put up precious collateral.
Tenant Benefits
- Avoid large upfront costs: with eGuarantee, new tenants can avoid the financial burden of a traditional bank guarantee of having to put down six to twelve months’ rent at the start of the tenancy. Instead, you will only have to pay a small annual service fee in smoothed installment payments.
- Improve your financial circumstances: tenants who switch their original bank guarantee to an eGuarantee lease bond solution mid-lease term will immediately have their initial security handed back to them, providing an instant boost in working capital.
- Build your business: invest back into your business operations, upgrades, people or growth with the six to twelve months’ rent you’ve just freed up as working capital. Get accepted fast: with eGuarantee, tenants can acquire a secure online approval in as little as 48 hours with no cash or collateral required.
- Stand out in the market: gain a competitive advantage in the lease application process by having your documentation ready for fast processing to secure your chosen property.
- Enhanced security: eGuarantee’s bond solution is a completely digitised form of lease security, allowing you to avoid the unwanted exposure of outdated paper authentication with a traditional bank guarantee. Have peace of mind knowing that your lease securities are safe and secure, stored on an encrypted platform.
- More convenient: as an end-to-end digital solution, eGuarantee bank guarantee alternative allows you to steer clear of the administrative burden and stress of bank applications and landlord negotiations with a simple electronic application and credit process.
- Total transparency: enjoy 24×7 access to real-time lease guarantee details.
- Automated processes: Stay up to date with automated reminders prior to lease expiry.
- Streamlined processes: communicate clearly and easily with your landlord, managing queries and changes instantly via the eGuarantee online dashboard.
- Better tenant-landlord relationships: start your lease on good terms with an eGuarantee bond that gives your landlord complete assurance of payment through a trusted third party guarantor.
Why choose eGuarantee?
1. Underwritten by the best
All eGuarantee bank guarantee alternatives are provided by Australia’s largest surety underwriter, Assetinsure and backed by some of the world’s largest reinsurers, all with AA/A – S&P ratings.
2. Secure your commercial lease faster
On average, eGuarantee’s bank guarantee alternative is issued up to three times faster than banks issuing traditional bank guarantees.
3. Growing industry adoption
As a win-win lease security solution, our bank guarantee alternative has already begun to earn interest from most of Australia’s largest commercial landlords. Dexus, Investa, Centuria, Mulpha, EG Funds, Aliro and many more business partners are now realising the real world benefit of eGuarantee’s alternative to a bank guarantee.
4. Tailored to the market
With bonding facilities available for $20,000 up to $15 million lease securities (before accommodation), eGuarantee’s alternative to a bank guarantee is a suitable option for many tenants as well as a number of startups looking to lease commercial property.
5. Support every step of the way
eGuarantee provides helpful guidance for new tenants as they complete the application process, engaging them directly to provide the necessary security.
