Standby Letter of Credit or Guarantee
A Standby Letter of Credit or Guarantee is a written undertaking given by CIBC to the person with whom you are doing business (beneficiary) to pay a specified amount of money in the event that you or a third party do not meet specific financial or performance obligations. Upon CIBC's payment to the beneficiary, you reimburse CIBC for such payment.
Different types of Standby Letters of Credit or Guarantees offered by CIBC
- Bid Guarantees (Bid Bond)
- Performance Guarantees (Performance Bond)
- Advance Payment Guarantees
- Retention Guarantees or Advance Payment Holdback Under Contract Guarantees
- Financial Guarantees
1. Improves your cash flow
- Eliminates or reduces the need to give a beneficiary, with whom you have entered into a contract, cash collateral or other security to support the performance obligations under the contract
- May eliminate the need for you to prepay for products or services, which allows you to use your funds for alternate purposes before payments become due
- A bid or performance guarantee may help you win contracts by providing the company with financial security of payment
- CIBC has expertise in structuring Standby Letters of Credit or Guarantees to meet your business needs while helping to protect your interests to the extent possible in the circumstances
- CIBC has developed numerous Standby Letter of Credit or Guarantee proformas to meet a variety of scenarios; we can customize any of our formats to suit your needs, subject to certain requirements
3. Access to trade finance expertise
- Our trade finance experts provide you with structuring, mitigation and financing expertise and up-to-date country and trade risk guidance to support and expedite your trade transactions
Is it for you?
Standby Letters of Credit or Guarantees may be for you if you:
- Do business domestically or internationally with government or other entities
- Enter into contracts or agreements, which require you to provide cash, collateral or other security to another party to support your business transactions or to meet specific financial or performance obligations
The above is intended to be only a general description of these products and their features. Certain conditions, restrictions and exceptions may apply. CIBC reserves the right to change or discontinue these products or any of their features at any time. These products and their features shall be subject to the terms and conditions of the applicable agreement governing their use. For more information, please contact our Trade Finance team.