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Non-Fund Based · Guarantees & Surety

Bank Guarantee (Bid · Performance · Advance) for Your Business

Win tenders and execute contracts on your bank's undertaking — bid bond, performance, advance payment and financial guarantees. Get your BG limit assessed the way banks assess it, with a CA-prepared, sanction-ready proposal.

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500+Tie-ups: Banks · NBFC · FI · VC · PE · AIF+
25+ YrsCA-led experience
10,000+Proposals disbursed
60+BG issuing banks

BG Limit Eligibility Calculator

Bank-format outstanding-guarantee method · Results update live · Amounts in ₹ Lakh

1 Your Business Data

Enter your tendering activity, contract pipeline and latest financials.

Bid Bond / EMD Guarantees
Performance Guarantees
Advance Payment Guarantees
Existing Limits & Financials

2 Bank Parameters

Standard sanction norms are pre-filled. Adjust to your target bank's credit policy.

Margin & Pricing
Eligibility Benchmarks
Note: These are indicative PSU / private-bank norms. Individual banks apply stricter or relaxed thresholds by internal rating (CMR / external rating), banking conduct and collateral. Our CA team maps your profile to the bank whose policy fits you best.

3 Your Result

Assessed the way a bank credit note computes it.

Recommended Total BG Limit —
Bid bond / EMD BGs—
Performance BGs—
Advance payment BGs—
Other BGs + peak buffer—
Less: existing BG limits—
Additional / fresh BG limit—
Cash / FD margin required—
Indicative BG commission (p.a.)—
Current Ratio
—
—
TOL / TNW
—
—
DSCR
—
—
Interest Cover
—
—
—
Get This Limit Sanctioned →
Method: BG Limit = average guarantees outstanding at any time — Bid BGs (annual bids × EMD% × validity÷12) + Performance BGs (contracts secured × PG% × period÷12) + Advance BGs (contracts × advance% × recovery÷12) + other BGs — plus peak-requirement buffer, rounded to the nearest ₹10 Lakh. Indicative only; final limit depends on bank appraisal, rating and conduct.
Watch & Understand

Bank Guarantee — Explained by CA Vikas Jain

Two quick explainers — choose your language. सरल हिंदी में या English में समझें कि Bank Guarantee कैसे काम करती है और bank आपकी BG limit कैसे calculate करता है.

Bank Guarantee क्या है और BG Limit कैसे बनती है?हिंदी

Bid bond, performance BG, advance BG — पूरा process, margin, commission और bank assessment सरल हिंदी में.

Bank Guarantee Explained — Limit, Margin & ProcessEnglish

How bid, performance and advance guarantees work, the outstanding-BG limit method, and how to get sanctioned faster.

Understand the Product

What is a Bank Guarantee?

A Bank Guarantee (BG) is a non-fund based facility where your bank undertakes to pay the beneficiary if you fail to meet a contractual or financial obligation. Government departments, PSUs and principals accept the bank's undertaking in place of cash deposits — freeing your working capital for execution.

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Win More Tenders

Bid bond/EMD BGs replace cash earnest money across tenders — bid on multiple contracts simultaneously without locking crores of your own funds.

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Execute on Bank's Undertaking

Performance and advance payment BGs let principals release work orders and mobilisation advances against the bank's commitment — not your cash collateral.

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Far Cheaper Than Cash Blocking

BG commission of ~0.50–2.00% p.a. plus 10–25% margin costs a fraction of blocking 100% cash as EMD or security deposit with every department.

BG Limit = Σ Guarantees Outstanding: (Annual Value × BG% × Validity Period ÷ 12) for each BG type
The standard outstanding-guarantee method used in bank credit manuals — bid/EMD, performance and advance BGs computed on your tendering and contract cycle, plus a peak-requirement buffer. The calculator above applies exactly this method.
Choose the Right Structure

Types of Bank Guarantee We Arrange

Bid Bond / EMD BG

Replaces cash earnest money in tenders — typically 1–5% of tender value, valid through the bid evaluation period.

Performance BG

Secures contract execution — typically 5–10% of contract value, valid through completion plus defect liability period.

Advance Payment BG

Secures the mobilisation advance (5–20%) released by the principal, reducing as the advance is recovered from bills.

Retention Money BG

Releases retention amounts withheld from running bills against the bank's undertaking — improving cash flow mid-project.

Financial BG

Secures a pure monetary obligation — security deposits, payment obligations, court/statutory requirements.

Customs / Tax BG

For customs duty (EPCG, advance authorisation), GST, excise and other statutory obligations to government authorities.

Deferred Payment Guarantee

Secures instalment payments for capital goods purchased on deferred terms — a DPG in place of upfront funding.

SBLC / Counter Guarantee

Standby LC or counter-guarantee structures for overseas beneficiaries, issued through correspondent banks.

Process

How a Bank Guarantee Works

Limit Sanction

Your BG limit is sanctioned against margin and security based on your tendering activity, order book and financials.

BG Issuance

Within the limit, the bank issues each BG in the beneficiary's prescribed format — tender EMD, performance or advance — against stipulated margin.

Live Period

The BG remains live through its validity plus claim period. Amendments and extensions are made as project timelines move.

Release / Renewal

On completion, the original BG is returned and cancelled, releasing margin and limit — or renewed for ongoing obligations.

Where You Can Get It

Banks Providing Bank Guarantee Facilities

BG is offered by virtually all scheduled commercial banks. PSU banks dominate government-tender BGs and offer the finest commission for rated borrowers; private and foreign banks are quick on formats and overseas counter-guarantees. We place your proposal where your profile prices best.

Get Sanction-Ready

Eligibility & Documents

Who is Eligible

  • Contractors, EPC firms, suppliers and businesses with genuine BG requirements from tenders, contracts or statutory obligations
  • Business vintage of 2–3 years with audited financials (newer units considered with collateral/strong promoters)
  • Current Ratio ≥ 1.25 and TOL/TNW within 3–4× (bank-specific)
  • DSCR ≥ 1.5 and satisfactory interest coverage where term debt exists
  • Satisfactory CIBIL / CMR rank and clean track record — no BG invocation history
  • Margin capability — 10–25% cash/FD margin as stipulated (higher for financial BGs)

Documents Required

  • KYC of entity, promoters & guarantors; constitution documents; GST & contractor registrations
  • Audited financials (3 years) + provisional & projections with CMA data
  • GST returns (12 months) and bank statements (12 months, all accounts)
  • Order book, work orders in hand, tender pipeline and completed-projects track record
  • Existing sanction letters, BG-wise outstanding list & limit utilisation; collateral papers if applicable
  • Beneficiary BG formats where already prescribed (tender documents / contract clauses)
Why FinanceSeva

A CA-Led Route to the Right BG Sanction

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Bank-Format Assessment

We compute your BG limit exactly on the outstanding-guarantee method banks use — bid, performance and advance BGs mapped to your tender cycle — so the number you ask for is defensible in the credit note.

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Right-Bank Placement

500+ tie-ups (banks, NBFCs, FIs, family offices, VC, PE, private funds, AIFs, incubators) mean we know which bank's BG policy, margin norms and commission card fit your rating — before you apply.

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Invocation-Safe Structuring

Validity, claim periods and formats vetted so guarantees release on time and margin comes back — protecting your conduct record and future enhancements.

CA Vikas Jain, Founder of FinanceSeva
"A BG limit is won or lost in the assessment note. When bid, performance and advance guarantees are computed on your actual tender cycle the way the bank's own manual computes them, sanction becomes a formality — and margin becomes negotiable. That is exactly how we prepare every BG proposal."
CA Vikas JainFounder, FinanceSeva.com · 25+ years in credit & structured finance
FAQs

Bank Guarantee — Frequently Asked Questions

Is a BG a loan? Does the bank pay money upfront?
No. A BG is a non-fund based limit — the bank lends its undertaking, not money. Funds move only if the beneficiary invokes the guarantee, when the bank pays and recovers from you. It is sanctioned separately from, and alongside, your cash credit limit.
How does the bank decide my BG limit?
By the outstanding-guarantee method: guarantees likely to remain live at any point — bid/EMD BGs from your annual tendering, performance BGs on contracts secured (through completion plus defect liability), advance payment BGs until the advance is recovered, plus customs/financial BGs. Our calculator above replicates this computation.
What margin and charges apply?
Typical stipulations: 10–25% cash/FD margin on the BG amount, commission of about 0.50–2.00% p.a. (charged per quarter or part thereof), plus stamping and handling. Financial BGs attract higher margin and commission than performance BGs; better ratings command finer pricing.
Performance BG vs financial BG — what's the difference?
A performance guarantee secures execution of a contractual obligation; a financial guarantee secures a pure monetary payment (security deposit, duty, dues). Banks treat financial BGs as riskier — expect higher margin (often 25–100%) and commission on them.
What validity and claim period should a BG have?
Validity should match the underlying obligation — bid validity for EMD BGs, completion plus defect liability for performance BGs — with a claim period (usually 3–12 months) after expiry as prescribed by the beneficiary. Over-long validities block your limit and margin unnecessarily; we optimise both.
What happens if a BG is invoked?
The bank must pay the beneficiary on a compliant demand, then debits your account — converting the BG into a fund-based overdue at penal pricing. Invocation severely damages your conduct record. Correct formats, realistic timelines and milestone tracking are the protection; we structure for this.
Do I need collateral for a BG limit?
BG limits usually ride on your overall working-capital security (hypothecation of current assets) plus the cash margin. Collateral requirements follow the bank's norms — strong financials, track record and clean invocation history bring collateral needs down substantially.
Can a new contractor or MSME get a BG limit?
Yes. Newer entities are considered with higher margin (25%+), collateral support or strong promoter net worth. MSME contractors routinely get BG limits alongside CC; some banks issue one-off BGs against 100% FD margin while the track record builds.
How long does sanction and issuance take?
With a complete, bank-format proposal: typically 3–6 weeks for a fresh working capital sanction including BG, and 1–3 weeks for enhancement within existing security. Individual BG issuance within a sanctioned limit takes 1–3 working days once the format is agreed.
What does FinanceSeva charge?
We work on a success-linked advisory model, disclosed transparently before engagement. Your first consultation, eligibility computation and bank-fit mapping are free — call +91-9863020202.

Get Your BG Limit Sanctioned — The CA Way

Share your order book and financials. We'll compute your eligible BG limit, prepare the bank-format proposal and place it with the best-fit lenders.

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