In 2014, a large real estate developer (Build Co) reached out to us about our Bank Guarantees. Build Co manages several small scale residential projects in southern Italy, and has maintained its market share despite larger competitors due to high satisfaction among its clients.
For almost a decade, 70% of Build Co’s revenue came from a single client, Apartment Co. Typically; Build Co finances their projects with Apartment Co using credit lines it maintains with local banks.
Recently, Apartment Co reached out to Build Co’s CEO, Gregory, and asked him to develop a large residential complex on a waterfront property. This project was more than twice the size of any of Build Co’s previous development. While Gregory trusted Apartment Co to pay in full and on time, he simply did not have the capital or credit to begin and complete this project.
Bankers and financial experts predicted that the proposed waterfront development project would max out Build Co’s credit lines with just 20% of its total cost. When Gregory approached other institutions for financing, they demanded collateral or another form of security sufficient to cover the additional lines. Neither Gregory nor Build Co had enough collateral to sufficiently increase their credit lines.
Gregory learned that one of the capital lending firms he was communicating with Bank issued Guarantees as security against loans. Greg learned of us through a friend of his whom previously used our Bank Guarantee services. Gregory took a week to decide his next course of action and decided to sign with us. We immediately issued the Bank Guarantee, utilizing our credit line.
Gregory submitted the Bank Guarantee as security to his top prospective financier. The financier accepted the instrument and provided the necessary capital for Apartment Co’s waterfront complex. Despite a small delay, Build Co completed the project and was paid on time. They in turn paid their financier in full and the deal was closed. Build Co has since returned to us for more Standby Letters of Credit and Bank Guarantees.