What is the bail certificate and how does it work?

Every buyer wants to make sure that he will not lose the money he is investing due to some complicity of the seller, and obviously the State is not the exception. It is for this reason that in their bidding rules, entrepreneurs are required to present an instrument to guarantee their service or product. In the following article we will discuss what is the bond certificate, whose final objective is to ensure the agreement between the two entities.

What is the bail certificate?

What is the bail certificate?

The bail certificate fulfills the same function as the guarantee slip, that is, this document ensures that you have the financial backing to acquire a financial commitment. According to the website “It is an instrument backed by real and liquid funds, classified by the Superintendency of Banks and Financial Institutions.” In this way, they are validated and accepted by the different financial institutions, such as banks, investment funds and insurance companies as an endorsement that the credit will be paid in case of default of the SME. “

Although the bond certificate has similarities with the guarantee, it also has differences. The two most important are that the issuance is made by reciprocal guarantee institutions, while the guarantee slips are issued by banks. But the most important distinction for entrepreneurs is that the bond certificate does not immobilize the funds for long periods of time. “So the supplier can have resources that could be used, for example, in working capital or in participating in other bids,” as explained on the ComparaPress portal.

On the same website, other features of this tool are pointed out, such as that it is nominative and non-negotiable. Likewise, it can be extended to term or sight, and it has the character of irrevocable, fulfilling like this, the requirements established in the norm of purchases for the guarantees of fulfillment of contract.

The Reciprocal Guarantee Institutions (IGR), being the entities that issue the certificates of guarantee, become guarantors of the obligations that the seller has with the beneficiary.

As noted in ComparaPress, if there is a breach of the contract guaranteed with this instrument, it will always be paid at its sole presentation, not opposing or resorting any resources that exempt the Institutions of Reciprocal Guarantees of their payment.

“The massification of the bond certificate in the public procurement system will allow increasing the participation of Mynes in the respective bids and, therefore, will generate a higher level of competition, with the consequent reduction in the prices of purchase of services and products by state entities “, estimated at the time Luis Andrés Maturana, president of the association that brings together the reciprocal guarantee companies, who issue these certificates.

How does it work?

How does it work?

As mentioned above, bond certificates are issued through Reciprocal Guarantee Institutions (IGRs) – internationally known as SGR – which are financial entities that support the financial commitments that SMEs acquire with others. If the SME can not fulfill the commitment acquired, the SGR will cover the unpaid balance.

The SGR, for assuming this risk, charges the SME a commission that goes from 4% to 6%, in advance.

Among its advantages, over other guarantee instruments for Public Market, are:

  1. Lower costs
  2. It is not reported as debt, since it is not disclosed in the financial system.
  3. It does not immobilize working capital.
  4. Saving time (can be requested online).

How to obtain it?

How to obtain it?

As we wrote in the article “How to obtain a bail certificate?”, In order to have this document by an IGR, the following information must be presented:

  • Writing.
  • Powers
  • Publication and Registration.
  • VAT and Balances.
  • Photocopies of RUT, society and partners.
  • Others, depending on the amounts to be guaranteed.

Who can access the bail certificates?

Who can access the bail certificates?

Natural persons with money or legal persons. Also companies with annual sales that do not exceed 150,000 UF. According to Jaime Pizarro, president of the Association of Reciprocal Guarantee Societies, bail certificates are ideal instruments for financing financial operations for working capital and for investment. In addition, he adds that a year ago more than 40 thousand SMEs from different areas and from across the country had obtained a bail certificate.

Currently there are web portals like Dorothy where you can perform online management. Once the application is sent together with the respective documentation, the certificate will be issued, which must be payable at sight and irrevocable. If there is a breach of the contract guaranteed by this instrument, it will always be paid at its sole presentation, and no opposition or recourse will be made that exempts the Reciprocal Guarantee Institutions from their payment.

If you are in a tender and you need to present a guarantee, the bail certificate is probably your best option.

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