Guarantees

In private lending, the owner of the Borrower is often required to guarantee the loan interest and principal payments being made by their company. Even if the financial strength of the owner is  not sufficient to pay the loan amounts, a guarantee provides comfort to Lenders that the owner is fully committed to the loan’s payment as it ties the owner’s personal financial welfare to the business’ loan payment performance. Third parties can also be used as guarantors if the owner is not strong financially. Relates to debt.

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