Australian businesses are increasingly turning to a new proptech solution called eGuarantee, which has enabled them to free up over $40 million in working capital otherwise tied up in bank guarantees for commercial leases.
eGuarantee provides lease bonds as a cost-effective alternative to traditional bank guarantees and is now issuing a lease bond almost every week.
Shaun Sergay, CEO of e-Guarantee, highlights the frustration for Australian businesses in having to tie up capital in bank deposits to secure guarantees for landlords, especially in today’s challenging economic climate.
Currently, nearly $10 billion is locked up in bank guarantees, with eGuarantee having successfully released $40 million for businesses since introducing digital lease bonds in 2021.
Mr. Sergay explains that landlords typically require a term deposit of nine to twelve months rent as security, which then becomes inaccessible for businesses. This not only ties up working capital but also affects their borrowing ability.
Tenants using e-Guarantee pay a small percentage (2.5-5.5%) of the bond value as an annual fee, and the process is swift, with the average lease bond taking just 48 hours to approve.
For commercial landlords, eGuarantee helps attract and retain tenants, with the entire process being digital, making it easier to track and safer from fraud.
eGuarantee is already accepted by 46 leading landlords, including Dexus, Centuria Capital, and EG Funds.
Chris Hynes, Head of Leasing and Workplace at Dexus, praises the benefits of lease bonds, stating that they allow customers to reinvest capital into their business growth without risk to the landlord.
eGuarantee’s lease bond solution has earned an A+ rating from HDI Global Specialty SE, an insurer rated S&P A+.
Real-life examples illustrate how eGuarantee works:
- A cycling supply store was able to provide longer-term security for a lease through eGuarantee, unlocking $111,000 in working capital, which they used to purchase extra stock.
- A mid-size accounting firm released $238,000 in working capital through eGuarantee, which they used to upgrade to a larger office with a premium fit-out.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
