At BRICS Project Finance, Term Loans are processed under Collateral Transfer and Bank Guarantees. Bank Guarantees that are received under Collateral Transfer facilities can be used by the recipient to secure Term Loans with our Banks or at any bank. A bank typically will have no objection to offering credit against a Bank Guarantee that is received in this manner. Lending can be up to 100% of face value, less the advance of interest charged, and bank fees associated. However, typical lending rates are presumed to be between 80-90% of face value. The total term of credit can be for the duration of the Guarantees lifespan, and will not exceed the expiry of the Guarantee.

These types of Guarantees are issued under facilities worded specifically to secure Term Loans and Lines of Credit. They are issued under the ICC 758 protocol, which is a strict set of rules that cover all types of guarantees and other payments. Guarantees are readily accepted by all international and private banks under this protocol and are often referred to as a Letters of Guarantee, Credit Facilities Guarantees, or Standby Letters of Credit.

It is important to note that although the Bank Guarantee is through Collateral Transfer facilities, this has no bearing on the quality of the Guarantee and can still be used to raise credit and loans. As the verbiage of the Guarantee will be ICC758 standard approved wording, there is no mention of ‘lease’ within the instrument itself.


What fees apply?

When applying for a Guarantee to secure Lines of Credit and loans, interest charges will apply in addition to the Contract Fee, which is for the rental fee of the Bank Guarantee. In our experience, international bank lending rates for loans secured against high-quality security, tend to be in the region of 3% per 12-month term, possibly more. This cost will differ depending on jurisdictions and currencies. These facilities suit financial requirements for terms under 5 years or where returns are high, allowing higher expenditure on annual rates. The longer the term, the less suited Collateral Transfer facilities are and therefore we discourage terms in excess of 5 years, although they are achievable.

How can BRICS Project Finance facilitate this?

BRICS Project Finance can assist its clients in raising Term Loans against Guarantees of this type in the event that our clients are unable to get lending facilities from their Banks. We hold strong relationships with reputable banks and private equity groups holding an appetite to expand lending opportunities in this area. It should be noted however that additional fees will apply if you utilise our banking services to obtain a Term Loan or Credit Lines. BRICS Project Finance can also open banking and lending facilities for its selected clients by direct introduction to our willing banks.