An advance payment Guarantee on behalf of the supplier/contractor to materialize an advance payment in case of a deal.
APG is also called an advance payment bond, where Bank is the issuer and owns the primary obligation (on-demand obligation, indemnity) to pay to the first person (buyer) in case of default by the second person (seller) who fails to provide the goods/services although an advance payment has already been received by him. This bond is required to secure retrieval of the advance payment made to the seller.
Request for advance payment is entertained to enable the contractor to go ahead with the start up or procurement costs/initial expenses that may take place before the actual work under the contract is initiated.