Proptech disruptor eGuarantee unlocks cash for business growth

Cedric Fuchs and Shaun Sergay, Founders of eGuarantee

eGuarantee, Australia’s exclusive distributor of lease bonds is a digitised, non-collateralised alternative to bank guarantees for securing commercial leases and has issued more than $8m in lease bonds in Australia and currently an additional $9m having passed credit and about to be issued.

The eGuarantee lease bonds are providing small and medium businesses with access to capital at a time when cash flow, resilience and growth remain key priorities in response to COVID-19 pandemic.

eGuarantee set to disrupt the leasing sector

In Australia, only two out of five (40%) SMBs say that they have sufficient cashflow to navigate the end of lockdowns. This figure significantly drops to 21% of small businesses employing 26-50 staff.

With an estimated $7 billion being tied up in bank guarantees, eGuarantee’s company mission is to disrupt the commercial leasing sector and bring about a more equitable balance to the tenant-landlord relationship while unlocking value for both parties.

eGuarantee Co-Founder and CEO, Shaun Sergay said, “The opportunity is clear and the solution is powerful as both business and the economy rely on access to cash to recover and grow.

“Lease bonds, popular in European and American markets, 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.”

“Where bank guarantees require up-front cash or collateral, eGuarantee’s lease bond doesn’t. We issue bonds from $20,000 up to $7.5 million,” Shaun Sergay said.

“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 has already proven to be an industry that is ripe for innovation, and lease bonds provide an intuitive and efficient digital experience.”

“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 receives applause from clients

The local branch of the global corporate advisory consultancy, Morrow Sodali recently accessed a lease bond using eGuarantee for work in its new Pitt Street office.

For Managing Director (APAC), Angus Booth the impact was significant to their business growth and he believes that they’ll be reaping the benefits for a long time.

“We recognised that the pandemic offered a unique opportunity to enhance the skillset of our people by hiring great new talent while our competitors were making staff redundant.”

“The lease bond allowed us to unlock $500,000 of working capital which we have invested back into the business and our people to facilitate the company’s long term growth.”

“This contributed to a number of initiatives which have resulted in us more than doubling the headcount in our ESG advisory team, supporting our expansion into new markets such as Seoul, Hong Kong and Japan and making enhancements to our technology platforms.”

“These initiative have tremendously facilitated us, overall to put efforts in improving our ability to meet the evolving needs of our clients in the APAC region,” said Mr Booth.

“Our landlord, Charter Hall, provided the flexibility and support to use the lease bond, and we’re grateful to partner with a landlord who sees the significant and material benefits which will positively impact our business and allow us to grow within their portfolio over time.”

Co-founder and Executive Chairman of eGuarantee, Cedric Fuchs, a real estate and insurance veteran who co-founded Charter Hall, believes that lease bonds are revolutionary.

“It’s the first alternative with 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 and deliminating paper-based processes.”

“Importantly eGuarantee’s lease bond is APRA approved and issued by Australia’s largest specialist insurer, Assetinsure backed by a panel of seven S&P AA/A – rated global reinsurers.”

“The way we emerge from this pandemic will be key to our future prosperity and growth.”

“Our lease bond offers businesses quick access to funds that can help them get back on their feet, support growth strategies and empower positive leasing relationships with landlords.”

“The ability to unlock capital held up in bank guarantees presents enormous opportunities for businesses and has the potential to reinvest billions into the Australian economy.”

“With Australia expecting to see a contraction in our next quarter GDP reading, encouraging capital spending will be vital in our post-lockdown exit strategy,” said Mr Fuchs.

“In addition, we have also provided assistance to many tenants to convert their bank guarantees mid-lease to lease bonds, which has led to several major landlords initiating deeper discussions around lease bonds and the eGuarantee system adoption.”

“eGuarantee offers many advantages for landlords, including the digitisation of landlord portfolios of bank guarantees, agnostic of bank, to provide a full digital experience.”