2 min read
What it means
In trade finance, a payment guarantee (or bank guarantee) is a third party — usually a bank — undertaking to pay the seller if the buyer defaults. It gives a supplier confidence to ship goods or extend trade credit to a buyer they don't yet trust, because payment is backstopped.
When it's used
It's common in cross-border trade and with new relationships where the seller can't easily assess the buyer's credit. It bridges the trust gap so trade can happen. For domestic working-capital needs, simpler tools — invoice finance or a revolving facility — usually fit better than a formal trade guarantee.
What it means for you
Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.
Frequently asked questions
Who provides a payment guarantee?
Usually a bank or specialist trade-finance provider, on behalf of the buyer. They charge a fee for standing behind the payment. The guarantee reassures the seller that they'll be paid even if the buyer defaults.
When would I need a payment guarantee?
Most often in international trade or with unfamiliar counterparties where trust and credit assessment are hard. For everyday domestic cash-flow needs, invoice finance or a revolving facility are simpler and usually more appropriate.
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Credicorp lends to your company, not to you personally — short-term working capital with no personal guarantee. See what your business could access.