A security deposit alternative to letters of credit (L/Cs) put up by tenants to guarantee payment of rent to commercial landlords is on offer from fintech company, TheGuarantors.

The company says its offering, Securiti, is particularly suited to unexpected conditions forced on the commercial property market by the coronavirus pandemic.

Economic conditions have rendered some tenants unable to pay rent while other firms are questioning after months of homeworking whether office space is needed at all.

L/C similarities

Securiti allows commercial landlords to return or forego a tenant's security deposit in exchange for a surety bond issued by investment grade insurance carriers.

All bonds benefit from the same independence principle as an L/C and provide similar benefits in terms of being safer than cash and stronger than a personal guarantee

Another similarity is that like an L/C, Securiti automatically renews every year, thus avoiding the risk of a landlord's coverage lapsing mid lease term

Landlord and tenant benefits

According to TheGuarantors, bonds can cost tenants just four to six per cent of a typical security deposit.

The company says landlords meanwhile enjoy the same protections as an L/C insofar as it is payable even in the event of bankruptcy and all claims are paid with no questions asked.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.