What Are Personal or Corporate Guarantees?

What Are Personal or Corporate Guarantees?

With regards to lending, personal or corporate guarantees are the borrower's promise to repay the loan even if a default occurs and there is an unpaid or deficient balance after the collateral is liquidated to settle the loan balance.

This guarantee means that should a borrower fail to settle any remaining loan balance after liquidation of the collateral, the borrower can face legal recourse by the lender.

In many cases, legal recourse can include:

  • Freezing and liquidation of personal and company bank accounts
  • Freezing and liquidation of other assets
  • Other forms of legal actions to reclaim payment for the loan balance plus an added costs

Depending on the market, borrowers can also face the following:

  • Reporting of the delinquent debt on local credit bureaus
  • Being restricted from obtaining future financing or credit
  • Being restricted from establishing new accounts with some banks

For these reasons, non-recourse loans such as Mountbatten's Securities Financing products are a great alternative to traditional margin loans for borrowers who wish to avoid the risks associated with having to provide personal or corporate guarantees.

A non-recourse loan loans is secured solely by the collateral provided which is the only thing at risk should a default occur.

So, if you or a client are interested in borrowing against assets such as publicly traded securities and select crypto currencies as the collateral, we ask that you consider a Securities Financing product from Mountbatten Global.

Michael Rowe

Director

The Mountbatten Global SPC Fund

[email protected]

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