With an estimated $7 billion tied up in bank guarantees, Australia’s exclusive distributor of lease bonds, eGuarantee is on a mission is to disrupt the commercial leasing sector and bring a more equitable balance to the tenant-landlord relationship.

eGuarantee is a digitised, non-collateralised alternative to bank guarantees for securing commercial leases, which has issued more than $8 million in lease bonds in Australia since launching in early 2021. An additional $9 million in lease bonds have passed credit and are about to be issued.

eGuarantee co-founder and CEO, Shaun Sergay says the opportunity is clear at a time when both business and the economy is relying on access to cash to recover and grow.

“Lease bonds challenge the status quo in Australia, presenting financial and operational benefits to tenants and landlords. Lease bonds are the cheapest form of non-collateralised credit, sitting on average at 5% less than an unsecured bank overdraft. But the game changer for tenants lies in the ability to redirect a sizable amount of money secured with a bank back into the business,” he said.

“Where bank guarantees require up-front cash or collateral, the company’s lease bond doesn’t. We issue bonds from $20,000 up to $7.5 million, switching to a lease bond can provide businesses with a significant cash flow advantage and can help landlords ease the lease security burden for their tenants and assist in making their tenants more robust through access to increased working capital. With tenants achieving a rate of return on the business’ working capital, greater than the bond fee, making the switch brings a really clear business advantage.”

Commercial leasing is an industry ripe for innovation, and lease bonds provide an intuitive and efficient digital experience, according to Sergay.

“While bank guarantees can have tenants waiting up to six weeks, lease bonds draw upon an advanced proptech platform to process within 20 minutes, making it one of the most efficient ways to get capital back into businesses to drive growth and profit,” he said.

eGuarantee co-founder and executive chairman, Cedric Fuchs, who also co-founded property investment firm, Charter Hall, believes that lease bonds will revolutionise the leasing landscape. 

“It’s the first and only alternative which presents benefits for both tenants and landlords, and brings real value, releasing tenants from traditional bank guarantees, while introducing operational efficiencies by digitising the customer journey, doing away with paper-based processes.

“eGuarantee is the exclusive Australian distributor of the Assetinsure Leasebond product. Leasebonds are issued by Assetinsure as agent for an international insurer and are reinsured by a panel of globally rated AA/A- reinsurers. Being issued on behalf of international insurers and reinsurers, Leasebonds are not APRA regulated products but Assetinsure, being an APRA regulated entity provides customers the comfort of dealing directly with a regulated Australian entity.”

He added: “The way we emerge from this pandemic will be key to our future prosperity and growth. Our first of its kind lease bond offering provides businesses with quick access to existing funds that can help them to get back on their feet, support growth strategies, and empower positive leasing relationships with landlords.”