Loan Guarantees

A loan guarantee is a promise made by a third party, often a government or financial institution, to cover a borrower’s debt if they default—meaning they can't repay the loan. This assurance encourages lenders to provide loans to individuals or businesses that might otherwise be considered too high-risk. Essentially, it helps borrowers secure financing by reducing the lender's risk, fostering economic growth and access to credit. If the borrower fails to pay, the guarantor steps in to repay the lender, ensuring that funds are recovered.