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In a competitive market, accessing cost-effective financial guarantees can be a game-changer. Surety bonds offer MSMEs a reliable alternative to traditional bank guarantees, freeing up working capital and enabling businesses to secure larger projects, meet procurement requirements and expand their operations. Whether bidding for government tenders or fulfilling private procurement contracts, surety bonds are designed to help MSMEs grow without stretching their finances.

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What Are Surety Bonds?

Collateral Free alternatives to Collateral Backed Bank Guarantees.

Introduced in 2022 and regulated by IRDAI, Surety bonds are financial instruments that guarantee the performance of an MSME’s obligations—whether to a government entity or a private organisation. Unlike traditional guarantees, surety bonds:

• Require no collateral, preserving your working capital.
• Offer competitive pricing—often at half the cost of a bank guarantee.
• Allow you to focus resources on business growth rather than locking them in financial guarantees.

From bid bonds to advance payment bonds, surety solutions cater to a wide range of needs, supporting MSMEs in their journey toward success.

Regulatory Documents and Advisory from Ministries for using Surety Bonds

See which Government Beneficiaries are accepting SBs

Why Should MSMEs Embrace Surety Bonds?

Issued by leading Insurance Companies, Surety Bonds are BG equivalent guarantees. Beneficial cost-wise, effort-wise, hassle-wise!

• Lower Costs

  Save 40-60% compared to BGs, making your guarantees cost-effective.

• Free Up Working Capital

  Unlike bank guarantees, surety bonds do not tie up valuable collateral. This flexibility means you can use your working capital for business expansion, payroll or new project opportunities.

• Expand Opportunities

  Surety bonds make it easier to participate in government tenders and private contracts. They reduce financial constraints, enabling you to take on more projects.

• Hassle-free Experience

  Manage, issue, and renew bonds effortlessly on the axiTrust platform—eliminating paperwork and manual follow-ups.

• Strengthen Financial Position

  With no need to pledge fixed assets, MSMEs can maintain a stronger financial profile, ensuring better liquidity and creditworthiness.

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What is the real cost of BGs to businesses?

Understanding the economics of SBs is tied to uncovering the REAL cost of BGs

When you have Bank Lines, backed by Collaterals

When collaterals are exhausted and BGs are 100% FD Backed

Even with With Bank lines BGs still cost upwards of 5% of Guarantee needed.

The above representations assume your locked funds would yield 20% returns at the end of the year. They also assume that creating a BG requires 20% margin money - and this is stuck in BGs.

Without any bank lines and with FD used as collaterals, BGs cost as high as 12-14%

The above representations assume your locked funds would yield 20% returns at the end of the year. They also assume that creating a BG requires 100% FD investments—which isn't earning you as much!

Of course some of the above assumptions change basis your business. What you can do note that the cost of BGs needs to include the opportunity cost - for it to be comparable to Surety Bonds. Because in the latter, there are no collaterals to provide!

When you compare the Surety Bond Premium with the above actual BG costs, businesses - especially the MSMEs - can unlock substantial cost and efficiency savings - as much as 40%-60% over BG costs!

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