- eGuarantee has distributed $8M in lease bonds, unlocking cash tied up in bank guarantees for Australian businesses
- Lease bonds don't require up-front payment, collateral or lengthy wait times unlike bank guarantees
- Will free up vital capital for businesses to utilise for post-pandemic recovery or business growth strategies
Australian lease bond provider, eGuarantee, has distributed more than $8 million in lease bonds to assist Australian business growth, with another $9 million waiting in the wings.
An innovative bank guarantee alternative
eGuarantee provides business owners securing a commercial lease with an alternative to bank guarantees, which tie up large sums of capital as collateral.
The lease bonds distributed by eGuarantee are digitised and non-collateralised, freeing up capital that would have been inaccessible with a bank guarantee.
The innovative alternative, popularised in European and American markets, could not have come at a better time for Australian businesses on the back of the pandemic when cash flow is crucial.
The prospects for smaller businesses reemerging from lockdowns are bleak, with only 40% indicating they have adequate cash flow and this figure halving (21%) for businesses that employ 26-50 people.
The proptech company aims to disrupt the commercial leasing sector and even the playing field for tenants by unlocking an estimated $7 billion bound by bank guarantees.
Tenants and landlords reap the benefits
eGuarantee was co-founded by Shaun Sergay, now CEO of eGuarantee, and property magnate Cedric Fuchs.
Mr Sergay said both tenants and landlords can reap the financial and operational benefits presented by eGuarantee.
“Lease bonds are the cheapest form of non-collateralised credit, sitting on average at five percent less than an unsecured bank overdraft. But the game changer for tenants lies in the ability to redirect a sizable amount of money secured with a bank back into the business,” said Mr Sergay.
Mr Sergay explained that lease bonds can range between $20,000 and $7.5 million, and don’t require payment up-front or collateral like bank guarantees do.
Lease bonds also slash the lengthy wait times of bank guarantees from around six weeks to within 20 minutes.
“Switching to a lease bond can provide businesses with a significant cash flow advantage and can help landlords ease the lease security burden for their tenants and assist in making their tenants more robust through access to increased working capital.”
Shaun Sergay, eGuarantee co-founder & CEO
“With tenants achieving a rate of return on the business’ working capital, greater than the bond fee, making the switch brings a really clear business advantage,” Mr Sergay concluded.
eGuarantee received high praise from Angus Booth, Managing Director of Morrow Sodali, who utilised a lease bond to secure their new Pitt Street office.
Mr Booth said the lease bond was significant to their business growth and allowed Morrow Sodali to hire new talent during trying times.
“The lease bond allowed us to unlock $500,000 of working capital which we have invested back into the business and our people to facilitate growth,” said Mr Booth.
Revolutionising commercial leasing
eGuarantee Executive Chairman and co-founder of investment company Charter Hall, Cedric Fuchs, believes digitised lease bonds to be a game-changing addition to Australia’s commercial leasing sector.
“It’s the first and only alternative which presents benefits for both tenants and landlords, and brings real value, releasing tenants from traditional bank guarantees, while introducing operational efficiencies by digitising the customer journey, doing away with paper-based processes.”
Cedric Fuchs, eGuarantee co-founder & Executive Chairman
“eGuarantee is the exclusive Australian distributor of the Assetinsure Leasebond product. Leasebonds are issued by Assetinsure as agent for an international insurer and are reinsured by a panel of globally rated AA/A- reinsurers.
Being issued on behalf of international insurers and reinsurers, Leasebonds are not APRA regulated products but Assetinsure, being an APRA regulated entity provides customers the comfort of dealing directly with a regulated Australian entity,” said Mr Fuchs.
Mr Fuchs emphasised that how Australia emerges from the pandemic will set the tone for future prosperity.
“Our first of its kind lease bond offering provides businesses with quick access to existing funds that can help them to get back on their feet, support growth strategies, and empower positive leasing relationships with landlords,” he said.
eGuarantee can also assist tenants in transforming their bank guarantees into lease bonds, even midway through a lease.
“The ability to unlock capital currently held up in bank guarantees, presents enormous opportunities for businesses while having the potential to reinvest billions into the Australian economy,” Mr Fuchs concluded.
