Bank Guarantee, ERGO Letter of Guarantee and Seguro Garantia
Understand the difference between a bank guarantee (fiança bancária), issued by a bank, and ERGO's letter of guarantee (carta fiança), issued by a guarantor — who issues it, how the cost is set, what it ties up in your bank credit line and who decides on acceptance. And why seguro garantia is a different product.
A bank guarantee is issued by a bank and usually ties up the company's credit line. ERGO's letter of guarantee (carta fiança) is issued by a guarantor as a civil personal guarantee: it does not consume the bank credit line, its cost is set by quote after analysis, and its acceptance depends on the judge, the tender documents or the contracting party. Seguro garantia is a third product, sold by insurance companies — ERGO does not sell it. Get your quote online through the app or on WhatsApp +55 11 93444-0099.
Key facts
- Issuer: Bank guarantee: a bank. ERGO letter of guarantee: a guarantor (ERGO ASSURANCE S.A.), which is neither a bank nor an insurance company.
- Impact on bank credit line: The bank guarantee usually ties up the bank credit line; ERGO's letter of guarantee does not.
- Cost: Bank guarantee: the bank’s fee, plus counter-guarantees and reciprocity. ERGO letter of guarantee: quote-based, depending on the risk analysis, the guaranteed amount, the term and the type of guarantee.
- Acceptance: In court, it depends on a filing in the case and on the judge's acceptance; in tenders or contracts, on the tender documents or the contracting party.
- Collateral required: The bank guarantee typically requires counter-guarantees and banking reciprocity; ERGO's letter of guarantee starts from an analysis of the company and its documents.
- What about seguro garantia?: It is a different product, issued by insurance companies. ERGO does not sell it: it issues letters of guarantee.
Side-by-side comparison
| Criterion | Bank guarantee (bank) | ERGO letter of guarantee (guarantor) |
|---|---|---|
| Issuer | Bank | Guarantor (ERGO) |
| Nature | Bank credit operation | Civil personal guarantee |
| Cost | Bank fee + counter-guarantees | Quote-based |
| Consumes bank credit line? | Yes, usually ties up the line | No |
| Collateral required | Counter-guarantees and banking reciprocity | Company analysis + documents |
| Judicial acceptance | Depends on the judge's acceptance | Depends on a filing in the case and the judge's acceptance |
| Issuance time | Usually takes longer | Fast issuance once the documentation is complete, digital (ICP-Brasil) |
| Best for | Companies with spare bank credit line | Preserving cash and the credit line |
What is a bank guarantee
A bank guarantee (fiança bancária) is a guarantee issued by a bank in favor of a beneficiary (a public body, a private contracting party, or a court). The bank commits to paying a defined amount if the guaranteed company fails to perform its obligation.
Because it is a banking product, the bank guarantee normally consumes the company's credit line at the bank — the guaranteed amount is reserved and is no longer available for other operations such as working capital, financing, or foreign exchange. Beyond the fee, banks usually require counter-guarantees and reciprocity (deposits, average balances, other products).
This makes the bank guarantee heavier in total cost and less flexible for companies that need to preserve their credit line for day-to-day operations.
What is ERGO's letter of guarantee
ERGO's letter of guarantee (carta fiança) is a civil personal guarantee: ERGO ASSURANCE S.A., as guarantor, undertakes to the beneficiary (a court, a contracting party or a public body) to honor the obligation assumed by the guaranteed company (the principal). ERGO serves businesses only and has issued guarantees since 2002.
The essential difference from a bank guarantee: ERGO is not a bank and does not lend money, so the letter of guarantee does not consume the company's bank credit line. The company keeps its line free to finance its operations.
The price is always set by quote, after analyzing the company and the transaction. Issuance is digital, with an ICP-Brasil certificate. Acceptance of the letter of guarantee depends on a filing in the case and the judge's acceptance in court, or on the tender documents and the contracting party in tenders and contracts.
What about seguro garantia? It is a different product, issued by insurance companies under their own rules. ERGO is not an insurance company and does not sell seguro garantia: it issues letters of guarantee and contract guarantees.
Which one to choose
A bank guarantee can make sense when the company already has a spare credit line and a banking relationship that will not be harmed by tying up that credit. Even so, the total cost tends to be higher because of the required counter-guarantees and reciprocity.
ERGO's letter of guarantee makes sense for companies that need the guarantee without tying up their bank credit line. Before contracting, confirm in the tender documents, with the contracting party or with the lawyer handling the case that this form will be accepted in your situation.
What ERGO's letter of guarantee preserves
Your bank credit line: the company's credit stays free for working capital, financing, and other operations — whereas the bank guarantee ties up that line.
Cost by quote: the price of ERGO's letter of guarantee depends on the risk analysis, the guaranteed amount, the term, the type of guarantee and the company’s profile — whereas a bank guarantee usually adds counter-guarantees and reciprocity to the bank’s fee. Get your quote online through the app or on WhatsApp +55 11 93444-0099.
Speed: fast issuance once the documentation is complete, digitally, with an ICP-Brasil certificate. Acceptance still depends on the judge, the tender documents or the contracting party.
Frequently asked questions
Is a letter of guarantee (carta fiança) the same as a bank guarantee?
No. Both guarantee the performance of an obligation, but a bank guarantee is issued by a bank and usually consumes the company's credit line. ERGO's letter of guarantee is issued by a guarantor, as a civil personal guarantee, and does not consume the bank credit line.
Is ERGO's letter of guarantee the same as seguro garantia?
No. Seguro garantia is a different product, issued by insurance companies. ERGO is not an insurance company: it issues letters of guarantee and contract guarantees as a guarantor.
Which is cheaper, a bank guarantee or ERGO's letter of guarantee?
It depends on each case. A bank guarantee usually requires, on top of the bank’s fee, counter-guarantees and banking reciprocity, raising the total cost. The cost of ERGO's letter of guarantee is always set by quote, based on the risk analysis, the guaranteed amount, the term and the type of guarantee. Get your quote online through the app or on WhatsApp +55 11 93444-0099.
Does ERGO's letter of guarantee consume my bank credit line?
No. ERGO is not a bank and does not extend credit, so the letter of guarantee does not tie up the company's bank credit line. The bank guarantee, in turn, usually does.
Does a court accept a letter of guarantee instead of a cash deposit?
It depends on the case. The company requests the substitution in the proceedings and it is up to the judge to decide whether to accept the guarantee offered. ERGO helps size the letter of guarantee for the amount and the case involved.
Can a letter of guarantee be used in public tenders and contracts?
It can, according to the tender documents or the contract. The tender documents, or the contracting party, define which forms of bid guarantee (bid bond) and performance guarantee (performance bond) are accepted.
How long does it take to issue a letter of guarantee?
ERGO offers fast issuance once the documentation is complete, digitally, with an ICP-Brasil certificate. Formalizing a bank guarantee usually takes longer.
Need a guarantee without tying up your bank credit line?
ERGO issues letters of guarantee for public tenders, contracts, and court proceedings — without consuming your bank credit line.