Loan guarantee
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 guaranteeing to those not able to access bank loans due to poverty.
Government Programs and agencies
United Kingdom
United States
- Fannie Mae
- Export-Import Bank
- Federal Family Education Loan Program
- Freddie Mac
- Government National Mortgage Association
- Small Business Administration
- USDOE
- VA loan
See also
Micro-lending Guarantees
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
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