How does the personal guarantee work?

We often get questions about how a personal guarantee for business loan works, so I would like to share the answers to the most frequently asked questions.

Is the guarantee a verbal promise?

A guarantee is a personal obligation of the guarantor for the loan. The guarantor signs the guarantee contract with an electronic signature.

Does it work?

After terminating the loan agreement with the company, we put both – the company and the guarantee to the court. After the court approves the claim, the executive order is issued for collection both from the company and from the individual, so the business loan is similar to the consumer loan, because the individual becomes responsible for the loan as well.

What happens if the company bankrupts?

In case of bankruptcy of the company, we carry out recovery from the guarantor. We have had cases where the company no longer operates, but the investors do not even notice this, because all payments are covered by the guarantor according to the schedule.

Is the guarantor solvency assesed?

We carefully check each guarantor – we evaluate income sustainability in the social insurance system and credit history in the Creditinfo database. The safety of investors’ money is very important to us – if the guarantor does not meet our criteria, we do not issue the loan to the company. From 2019 summer, when we started keeping these statistics – we did not provide more than 1.5M Eur loans due to guarantor not meeting our criteria.

Could I see what the guarantee agreement looks like?

Of course, you can see the guarantee template by clicking on this link.

Asmeninė garantija Finbee


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