Loan guarantee: Difference between revisions

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A loan guarantee is a promise to assume a private debt obligation if the borrower defaults. Most loan guarantee programs are established to correct perceived market failures by which small borrowers, regardless of creditworthiness, lack access to the credit resources available to large borrowers.^[1] Loan guarantees can be made by governments. private companies, or individuals.

Governments provide loan guarantees to private companies as part of economic policy. For example the US Department of Energy announced in July 2009 that it will provide up to $30 billion in loan guarantees for renewable energy projects. Other loan guarantees have been made to US auto makers and banks to keep private companies operating and to prevent unemployment.

Individuals often give loan guarantees to help other family members obtain loans for a small business, for housing or other needs. An extension of this is to provide micro-loan guarantees through person-to-person lending to those not able to access bank loans because of poverty.

Government Programs and agencies

United Kingdom

Small Firms Loan Guarantee

United States

Micro-lending Guarantees

United Prosperity

References

^ Riding, Alan L. "On the Care and Nurture of Loan Guarantee Programs." Financing Growth in Canada. Paul J. N. Halpern, ed. University of Calgary Press, 1997.

External links

FedConnect

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[1] Riding, Alan L. "On the Care and Nurture of Loan Guarantee Programs." Financing Growth in Canada. Paul J. N. Halpern, ed. University of Calgary Press, 1997.

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 == See also ==
+*[[person-to-person_guaranteeing|Person-to-Person Guarantees]]
 *[[Award]]
 *[[Energy Policy Act of 2005]]
 *[[FedConnect]]
 *[[Solicitation]]
 == Micro-lending Guarantees ==