What is a bank guarantee?
A bank guarantee is a promise provided by a bank that if a certain borrower fails to pay a loan, then the bank will take care of the losses. The bank will assure the original creditor through this bank guarantee that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. A bank guarantee enables the customer (or debtor) to acquire goods, buy equipment, or draw down a loan.