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Insurance that a construction contract will be completed successfully.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
A loan guarantee that a project will be paid for even if it is abandoned. Producers or publishers will make this guarantee to a bank in order to secure loans to finance their projects. Completion bonding benefits the bank as it guarantees that its loan will be paid. It also benefits the producer or publisher as the loan generally does not become payable until the project is completed, improving his/her accounting position. Finally, it benefits the person who actually develops a given project as the producer or publisher is discouraged from suddenly terminating that project. This form of financing is common to the video game and film industries.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved