We provide lender-ready capital raise packaging and debt or equity placement support for business owners and buyers looking to secure serious term sheets and close funding on a defined timeline.
For business owners and acquirers pursuing private debt or equity, submit your deal for review. We revert within one working day with next steps and either a quote for our services.
Guarantees And Payment Security
A buyer wants to pay you an advance. Then they ask for an Advance Payment Guarantee (APG). This is normal in EPC, manufacturing, commodities with prepayment, and any contract where money moves before delivery.
The way you handle the APG will either keep the deal clean or turn it into a months-long mess. The two big failure points are (1) bad wording and (2) collateral requirements that choke your cash cycle.
An APG is a guarantee issued in favor of the buyer to secure repayment of the advance if the supplier fails to perform under the advance payment clause. Many APGs are structured as demand guarantees, meaning the issuer pays on a compliant demand and required documents, not on arguments about the contract dispute.
Simple way to think about it: The buyer is lending you money up front. They want a bank-backed refund mechanism if delivery fails. Your job is to make that mechanism fair, bankable, and aligned to the real risk window.
Do not commit to issuing an APG based on a WhatsApp line or a single paragraph in an email. You need the contract clause and the buyer’s template. The text drives acceptance, timeline, and margin.
If the buyer cannot provide these, the request is not ready for issuance.
Most rejections happen because the details are wrong, not because the supplier is weak.
These instruments get mixed up constantly. A clean deal uses the right one for the right risk.
| Instrument | Primary purpose | Typical sizing |
|---|---|---|
| Advance Payment Guarantee | Refund of buyer advance if supplier fails on the advance clause | Usually equals the advance amount, reduces over time |
| Performance Bond | Assures overall contract performance and completion | Often 5% to 20% of contract value depending on sector |
| SBLC used for APG purpose | Payment security tool drafted to mirror APG economics when accepted | Often equals the advance amount, can reduce if drafted that way |
If the counterparty will accept an SBLC format instead of a guarantee, that can widen issuer options. For SBLC basics and acceptance dynamics, see Standby Letter of Credit Services and Letter Of Credit Services.
Buyers tend to push aggressive templates. Issuers tend to refuse them. Your job is to get to a bankable middle. The best APG is the one the buyer accepts and the issuer can issue without a full cash freeze.
The APG should shrink as you deliver. If it does not, your balance sheet stays exposed longer than needed.
If the template is extreme, solve it early. Do not wait until the week of delivery.
Issuance is a credit process. The issuer is taking risk that you may not deliver and the buyer may call. Expect compliance checks, underwriting, collateral decisions, then issuance and delivery.
| Step | What happens | What you provide |
|---|---|---|
| 1) Lock requirements | Confirm the APG format, template, rule set, expiry, and reduction logic. | Contract clause, APG template, milestone schedule, beneficiary details. |
| 2) Underwriting | Issuer reviews your performance ability and refund ability if called. | Company documents, ownership, financials, track record, bank statements. |
| 3) Collateral and indemnity | Issuer sets the margin, security, and indemnity conditions. | Collateral plan, security details, internal approvals, signatories. |
| 4) Wording alignment | Issuer legal finalizes text that is bankable and accepted by the buyer. | Final wording, demand mechanics, delivery method confirmation. |
| 5) Issuance and delivery | The guarantee is issued and delivered to the beneficiary requirements. | Issuance instructions, address confirmation, beneficiary receipt. |
Many banks default to heavy cash margin, especially for first-time issuance, longer tenors, or higher-risk jurisdictions. If a full cash block breaks your ability to execute, you still have options.
Do not assume your house bank policy is the market. Issuer fit is a real lever.
If the guarantee is required to receive the advance, treat the margin as a short-term funding need and structure it like one.
Financely supports companies that need APGs, SBLCs, and documentary instruments by packaging the file to issuer standards, improving acceptance odds, and managing the issuance workflow. If cash margin is the bottleneck, we also help clients structure short-tenor bridge capital so the guarantee does not suffocate operations.
Start with our process at How It Works.
See Letter Of Credit Services and Standby Letter of Credit Services.
Most APGs are set at the advance amount stated in the contract and reduce as milestones are met. If the APG is drafted for more than the advance amount, push back and fix the text.
Timing depends on underwriting readiness and how clean the buyer template is. The fastest cases are those with finalized wording, complete KYB, and a clear collateral plan.
Sometimes. It depends on beneficiary procurement rules and the contract language. If accepted, an SBLC can be drafted to mirror the same economics and reduction logic.
Usually because beneficiary details are wrong, the text differs from the required template, or the demand mechanics are unclear. These are avoidable issues if you lock the requirements early.
Send the contract clause and the counterparty template. We will confirm fit, return a checklist, and run underwriting and wording coordination through issuance.
Submit via Contact Us.
This page is for general information only and does not constitute legal, tax, investment, or regulatory advice. Financely is not a bank and does not lend. Financely does not promise approvals or funding. Any engagement is subject to diligence, KYB, KYC, AML, sanctions screening, issuer criteria, and definitive documentation.
Financely advises growth-focused businesses on accessing capital by introducing their opportunities to professional investors. Financely is not a securities broker or dealer. Where appropriate, engagements are coordinated with regulated broker-dealers, investment banks, legal counsel, and other specialists.
Financely does not solicit, offer, or accept orders to buy or sell securities and makes no assurance regarding capital-raising outcomes.
Services are strictly business-to-business. Financely does not provide personal finance, consumer credit, or retail advisory services.
Advisory services are reserved for post-revenue companies that recognize the time and resources required for professional underwriting.
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