Learn what a surety bond (kefalet) is, how it differs from a bank letter of guarantee, and why it is a cash-friendly alternative for your business.
A surety bond guarantees that an obligation will be fulfilled according to the contract terms. For growing companies, it offers a cash-friendly alternative to a bank letter of guarantee.
The three parties
- Debtor: the party with the obligation (usually you or your company).
- Beneficiary: the institution or person requesting the guarantee.
- Surety: the insurer providing the guarantee.
Surety bond vs. letter of guarantee
Since a 2016 amendment to Turkey's Public Procurement Law, surety bonds are accepted as bid and performance guarantees in public tenders. Key advantages:
- No cash block — you don't tie up your capital.
- Keeps your credit line free — for your core business needs.
- Predictable cost — premium-based pricing is known in advance.
When is it used?
For tender participation, contracts, advance payments, customs, court/enforcement proceedings and maintenance periods.
Contact us for free advisory on your surety needs.
This content is for informational purposes.
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