A lease bond is a non-collateralised alternative to a bank guarantee or cash collateral for commercial lease security.
Unlike banks, where collateral is required to obtain a bank guarantee, lease bonds are issued based off an operational and financial assessment and not security or cash deposits.
Vega works is a broking partner for eGuarantee’s lease bond solution. Tenants access this security through a small annual fee, without the need to tie up valuable credit lines or a large amount of working capital in a bank account.
eGuarantee’s lease bond solution is issued by Assetinsure – Australia and New Zealand’s largest provider of surety bonds – as an agent on behalf of an international insurer backed by a global panel of AA/A- rated S&P reinsurers.
This credit rating is similar to the main banks in NZ.
Lease bonds are accepted by most big names in the commercial property sector in Australia and is growing in acceptance in New Zealand. eGuarantee will, if not already be approved by the landlord, contact the landlord to seek approval.
eGuarantee’s lease bond solution has already been accepted by 5 NZ registered banks.
Tenants pay an annual fee for a lease bond. For bonds below $200k, the fee is 5.5% pa of the bond value. Above $200k, the rate is generally lower and is determined by the financial assessment conducted by our underwriters.
A small establishment fee may also apply and in some cases legal fees may be incurred, depending on the organisational structure and requirements.
Subject to their landlord’s approval (and possibly their funder’s), tenants can switch to an eGuarantee lease bond solution at any time, even mid-term, if they are already locked into a lease. A variation of lease may need to be agreed, which may involve a renegotiation of lease terms. A swap to a lease bond solution would free up cash collateral or bank lines.
Minimum bond size $50,000
Lease bonds are aimed at tenants who want to use their capital more effectively. Lease bonds are not a solution for tenants whose credit rating is not strong enough to gain bank support.
A financial assessment forms part of the application process. Generally, businesses need to show:
In some instances, shareholders may be required to support their application with a Shareholder’s Guarantee
Choose the option that suits you best:
1. Email. Simply send an email to [email protected] with your inquiry and details. Our dedicated team at Vega Commercial will get in touch with you to assist you.
2. Contact Kevin Miles. Kevin Miles, our trusted Commercial Finance Specialist at Vega. You can reach Kevin at: