Smart Business Agents

Any business with a Greek Tax Registration number, regardless of their legal structure.

Import trade (Food & Beverages, Pharmaceuticals, Electric Appliances, Automotive, Apparel & Clothing): By using the Program to obtain Surety Bonds, Greek importers will be able to restore their credit lines with international suppliers, if not fully, at least to levels that would make their operation much easier.

Construction: Most construction companies are required to present Letters of Guarantee (LoG) to be able to submit a bid, implement a project, or provide maintenance services to the private sector. Obtaining a LoG from a bank can become strenuous due to extreme requirements on the bank’s side and also due to the difficulty of finding additional collaterals.

Surety insurers must follow a professional risk assessment process and apply strict criteria. Essentially, the assessment entails a thorough examination of the Principal’s business activity. Prior to issuing a bond, the Surety (insurer) must be certain that the applicant meets, among others, the following criteria:

• The type of the Surety Bond is coherent with the type of business the applicant runs.
• The applicant has the experience and the financial status that indicate his ability to meet future obligations and contractual requirements.
• The applicant is capable of covering current and future obligations.
• The applicant has an outstanding credit score and maintains a good business reputation.
• The applicant is able to offer collateral, if requested.
• There is good communication and information sharing between the insurer and the broker.

Open communication and timely submission of data regarding their financial status and their ongoing business activities help applicants build their trust with the Surety provider.

Obtaining a Surety Bond is more like getting a credit line from a bank than buying an insurance product.

To estimate the premium of a Surety Bond, the Insurer uses actuarial methods to assess the applicant based on elements such as financial status, experience and know-how in implementing similar projects. Premiums pay for in-depth pre-qualification services and are linked to the probability of the Principal being able to meet his obligations.

Performance, Maintenance and Payment Bonds are typically issued by the Insurer on a non-collateral basis, in accordance with the financial status and the experience the Principal has in similar projects. In some cases the Principal is requested to post corporate or personal assets as collateral security. Surety Bonds are more a form of credit, however, they do not reduce the Principal’s banking facility. On the other hand, to secure a Bank Guarantee a contractor must be able to post significant assets as collaterals, while the bank will reduce the contractor’s line of credit and the cash flows that correspond to future payment obligations will have to appear in the contractor’s financial statements. Moreover, the reduced line of credit may cause financing issues during the initial phases of the project.

In the qualification process, Insurers focus on the contractor’s business activity, financial  resources, experience, organizational status, existing works in progress, net revenues, management ability etc, to make sure that the contractor has the capacity to perform the bonded contract. The aim of this entire process is to mitigate the risk of a non-performing contractor. Banks, on the other hand, focus more on the quality of the collateral assets, as well as on how marketable these are, in case of partial or full forfeiture of the LoG. As soon as the bank is convinced that the contractor has the means to meet his payment obligations in case of forfeiture, then the qualification process is over.

If the Principal doesn’t meet the terms that have been explicitly included in the bonded contract, a forfeiture takes place. The Oblige notifies the Surety of the Principal’s non-performance  and files for the corresponding claim.

The Insurer is obliged to pay the total amount, which cannot exceed the bond value, and then will turn to the Principal for reimbursement of the claim amount.

Security bond terms can vary from 3 to 12 months, with the right to be renewed or extended.