Q. What is a performance bond? . This is an undertaking by a bank to pay a beneficiary a certain amount of money if the applicant fails to perform a contract as per the agreement between the applicant and the beneficiary.
Q. How does performance bond undertaken? An approval is normally obtained from credit, approval conditions met and an undertaking letter issued with the system generated reference number, unique to every performance bond.
Q. How do you determine the performance bond amount? The performance bond amount is usually either 5% or 10% the contract amount. This is always stated on the award letter issued to the applicant (customer).
Q. Who are parties to a performance bond (PB)?
(i) The bank: the party issuing the PB on behalf of the customer
(ii) The applicant: The customer applying for the PB at the bank.
(iii) The beneficiary:The procuring entity whom the PB is issued to.
Q. What tenor do JBB offer for Performance Bonds? The performance Bond duration is normally stated by the beneficiary in the tender document mostly 12 months, however few beneficiaries may vary the duration as long as it’s NOT open ended.
Q. Can I renew a performance Bond with JBB? JBB processes renewals of the performance bond on request by the customer.
Q. What do I require to renew a Performance Bond? Just a complete request in writing and bank statements for further evaluation
Q. How much does it cost to renew a Performance Bond? The charges apply on quarterly basis, i.e. 1% per quarter with a minimum of ksh5000.00, hence the commission is dependent on the period of the performance bond renewal period.
Q. What are the requirements for me to obtain a Performance Bond? A. First time applicant: Company/Enterprise registration documents, PIN for comp & directors, tax compliance, Award Letter, Bank statements if banking elsewhere, a copy of collateral to cover same (Bank is flexible) Repeat applicant: Award letter, collateral to cover and application. However Performance Bond of amount above Ksh.5m Bank may require more documents like Financials.