Can any experienced NLander advise on which is better between bank loan and bank guarantee in financing a new biz transaction.
Thanks.

Please provide more details on what you're trying to do. However, while a bank loan would provide cash, a bank guarantee is not direct cash. Also, you are expected to pay interest and fees on a loan but it's only fees that you would pay on a guarantee.

I want to acquire a luxury boat to expand my commercial boating business but do not have the cash. I approached a bank for help. They advised i get a loan to finance it but am sceptical about that prospect. i just need an expose on bank guarantee and how i can possibly use it to achieve my goal.
thanks.

For the Business you want to do, you need finance/cash not Guarantee. Loan gives you cash/finance while Guarantee is a form of collateral/support mostly used by contractors (it is mandatory for big time contracts) where the Employer (the contract owner) tries to gaurd against non-performance by you the contractor, needs a bank Guarantee as collateral since he will advance monies in milestone to you upfront. If the contractor fails to perform to standard , the employer calls in the guarantee. Meaning the Bank has t pay the money to the extent Guaranteed.

For this boat business Guarantee will not solve your problem but Loan. One is like a collateral or support the later is finance.

BG wont do it for this kind of transaction, except you want to lease the boat rather than buy one (leasing coy MAY demand a BG) You may consider a lease arrangement instead of outright purchase. (dis man is enjoying free consultancy )

But honestly bros if you are really in shipping as you claim you should have a good financial adviser on your payroll or on consultancy basis. Nland wont cut it.

Good one guys, i learnt a lot of things on this thread.

mrjingles:

BG wont do it for this kind of transaction, except you want to lease the boat rather than buy one (leasing coy MAY demand a BG) You may consider a lease arrangement instead of outright purchase. (dis man is enjoying free consultancy )

But honestly bros if you are really in shipping as you claim you should have a good financial adviser on your payroll or on consultancy basis. Nland wont cut it.

Bank Guarantee can work if the boat is being leased or it is a credit sale ie the owner is willing to collect instalmental payment. That way, a Bank guarantee can assure him that his money will be paid as at when due.

There are various innovative ways to finance your projects.

Thanks a lot. I gained something.

i tink bank loan is beta

bg

vicoloni:

I want to acquire a luxury boat to expand my commercial boating business but do not have the cash. I approached a bank for help. They advised i get a loan to finance it but am sceptical about that prospect. i just need an expose on bank guarantee and how i can possibly use it to achieve my goal.
thanks.

If your turn-over is good then a bank guarantee that is properly structured will be in your best interest.You can email me: bossinieroyale@yahoo.com for more info and assistance for a structured collateral assistance if you don't have any viable one.Best of luck!

I don't advice you get a bank loan from our local banks here. They are all criminals and loan sharks , unless you are willing to pay as much as 28% on interest plus other hidden charges. But if you can secure a BG from any of the top 5 local banks, you can get your boat on lease like a poster mentioned here or access financing from project finance companies at a minimal interest of at least 2.5% with one year moratorium or more using your BG as collatral,

warripekin:

I don't advice you get a bank loan from our local banks here. They are all criminals and loan sharks , unless you are willing to pay as much as 28% on interest plus other hidden charges.

Are you saying that ALL Nigerians banks are 'criminals' and 'loan sharks'? What a damning verdict. But it is from these same 'criminal' banks that you want him to obtain a BG.

warripekin:

But[b] if you can secure a BG from any of the top 5 local banks[/b], you can get your boat on lease like a poster mentioned here or access financing from project finance companies at a minimal interest of at least 2.5% with one year moratorium or more using your BG as collatral,

This is a big 'if' especially for a start-up. Mind you, a bank would not just issue a guarantee without some form of collateral or comfort.

The picture you also painted here is so rosy. What would he use as the collateral to obtain a BG from the local bank? Won't the project finance company charge a higher interest rate than the bank you earlier talked about? On what basis would this kind of business ask for a 1-year moratorium?

Pukkah:

Are you saying that ALL Nigerians banks are 'criminals' and 'loan sharks'? What a damning verdict. But it is from these same 'criminal' banks that you want him to obtain a BG.

This is a big 'if' especially for a start-up. Mind you, a bank would not just issue a guarantee without some form of collateral or comfort.

The picture you also painted here is so rosy. What would he use as the collateral to obtain a BG from the local bank? Won't the project finance company charge a higher interest rate than the bank you earlier talked about? On what basis would this kind of business ask for a 1-year moratorium?

please get me right, by criminal I don't mean it in that sense but purely out of anger due to my past experience with our local banks . I have been in business in the last 10yrs and I have had couse to deal with our local banks and I always end up with bad tales about them. Normally, the stipulated interested is about 18% and can be negotiated depending on the amount of loan you are seeking but the truth is by the time you apply for these loans, and your bank having gone through there analysis to check your ability to pay back, often come withv their own charges which in my own case, I was asked to pay 28% interest and a hidden charges of 3% making it all 31%. Well, because I had no option then, I went for it and that almost killed me. I virtually worked for them. Then I found out about project financing, Initially I didn't believe what they where offering but I went ahead to raise a bank gurantee from GTbank( the best bank for business in nigeria) tieing it to my project at hand and within three weeks, I got funds from this company abroad and interest was 4.5% because my brokers collected the difference on top. I have a lot to talk about project financing but hardly have time. You google project finance companies and find out more. I know two of such companies have offices in Nigeria. Or better still go to IPFA( I'm now a registered member) and found out more. Ponder! How doing Bi-courtney for instance raise money for their BOT projects? es about them. Normally, the stipulated interested is about 18% and can be negotiated depending on the amount of loan you are seeking but the truth is by the time you apply for these loans, and your bank having gone through there analysis to check your ability to pay back, often come withv their own charges which in my own case, I was asked to pay 28% interest and a hidden charges of 3% making it all 31%. Well, because I had no option then, I went for it and that almost killed me. I virtually worked for them. Then I found out about project financing, Initially I didn't believe what they where offering but I went ahead to raise a bank gurantee from GTbank( the best bank for business in nigeria) tieing it to my project at hand and within three weeks, I got funds from this company abroad and interest was 4.5% because my brokers collected the difference on top. I have a lot to talk about project financing but hardly have time. You google project finance companies and find out more. I know two of such companies have offices in Nigeria. Or better still go to IPFA( I'm now a registered member) and found out more. Ponder! How doing Bi-courtney for instance raise money for their BOT projects?

Like I have said ,BG is like a collateral. Start ups will find it very difficult to get a BG from a bank.

warripekin , This is an Object finance and does not work like a project finance. Even if GTB has legal ownership of the boat, which they will not like as opposed to a viable project that they are aware from a reputable employer like Shell, Mobil ,etc.

Note, a boat is wasting away in Marina financed by a bank. No bank will deal with object finances moreso boat now.

You have been in Biz for 10 yrs. His best option is Nexim, Afrexim etc.

it depends on what ur circumstances are and what kind of business relationship u have with the supplier. most guys so far have preferred loan to guarantee, but why would u want to buy outright(by loan) when u can get installment\credit(by guarantee)? with the right terms & conditions, i would favour a guarantee.

warripekin:

please get me right, by criminal I don't mean it in that sense but purely out of anger due to my past experience with our local banks . I have been in business in the last 10yrs and I have had couse to deal with our local banks and I always end up with bad tales about them. Normally, the stipulated interested is about 18% and can be negotiated depending on the amount of loan you are seeking but the truth is by the time you apply for these loans, and your bank having gone through there analysis to check your ability to pay back, often come withv their own charges which in my own case, I was asked to pay 28% interest and a hidden charges of 3% making it all 31%. Well, because I had no option then, I went for it and that almost killed me. I virtually worked for them. Then I found out about project financing, Initially I didn't believe what they where offering but I went ahead to raise a bank gurantee from GTbank( the best bank for business in nigeria) tieing it to my project at hand and within three weeks, I got funds from this company abroad and interest was 4.5% because my brokers collected the difference on top. I have a lot to talk about project financing but hardly have time. You google project finance companies and find out more. I know two of such companies have offices in Nigeria. Or better still go to IPFA( I'm now a registered member) and found out more. Ponder! How doing Bi-courtney for instance raise money for their BOT projects? es about them. Normally, the stipulated interested is about 18% and can be negotiated depending on the amount of loan you are seeking but the truth is by the time you apply for these loans, and your bank having gone through there analysis to check your ability to pay back, often come withv their own charges which in my own case, I was asked to pay 28% interest and a hidden charges of 3% making it all 31%. Well, because I had no option then, I went for it and that almost killed me. I virtually worked for them. Then I found out about project financing, Initially I didn't believe what they where offering but I went ahead to raise a bank gurantee from GTbank( the best bank for business in nigeria) tieing it to my project at hand and within three weeks, I got funds from this company abroad and interest was 4.5% because my brokers collected the difference on top. I have a lot to talk about project financing but hardly have time. You google project finance companies and find out more. I know two of such companies have offices in Nigeria. Or better still go to IPFA( I'm now a registered member) and found out more. Ponder! How doing Bi-courtney for instance raise money for their BOT projects?

Thanks for taking out time to reply. However, I need additional information from you.

1. Did GTBank ask for any form of collateral before issuing the BG to you?
2. Did you take exchange risk into consideration before taking the foreign loan?

To All,

Guarantee from a FI Guarantor is a good as cash O. When the loan is due to hit the FI straight ,no stories.

See EPL and HiTV with GTB issue.

Most FI abroad eg FMO, IFC, HSBC prefer a FI Guarantor. The FI here will still need to hold something incase you default too.

I'd think that BG is like LC in which the seller of the goods will ultimately like to be paid. I wanted to buy something from a company and I was asked to get a BG, then I told my bank which explained to me that it basically means money in the bank guaranteed. Your bank is putting up a surety that they will pay if you default and it's up to your bank to determine what type of collateral they will take in consideration for the BG.
Another point to remember is that BG is fluid. ie if another banking crisis hits, there is a likelihood of a stressed bank not honoring all contractual obligations involved in securing a BG, while a loan is money in your hand guaranteed, unless you blow it on strippers and ashewos.

thank all of you for the contribution made so far. It means that we still have good Nigeria ready and willing to share their hard earned knowledge free. Nigeria will be great again.thx

@ Pukkah.

I've heard a lot about project financing and would really like to connect with you per your practical positive experience on this.

Please can you kindly give me a call or sms on 070-43319280

Alternatively , can you drop your contact info on this thread.

Anyone who also would like to help me get project finance is welcome to call or drop contact info.

Thanks,

Nony_jay

nony_jay:

@ Pukkah.

I've heard a lot about project financing and would really like to connect with you per your practical positive experience on this.

Please can you kindly give me a call or sms on 070-43319280

Alternatively , can you drop your contact info on this thread.

Anyone who also would like to help me get project finance is welcome to call or drop contact info.

Thanks,

Nony_jay

pentacleng@gmail.com