Third-party capital remains a great option for organizations that wish to expand their business and do not have equity to develop the company. Even more so for companies that want to settle their debts and organize cash flow. Whatever your goal when applying for a business loan, it is important to understand what the possibilities are for your business.
After all, what to offer as a guarantee for a loan when your venture is young in the market and does not yet have a credit history? Or in cases that, regardless of the career time and the credibility of your company, the institution makes it a condition to have some kind of guarantee to effect the credit operation.
Understand the guarantor’s role in obtaining credit for your company
Seeing strategic planning as feasible growth for your business and at the same time not having the financial resources to make it really can seem like a complicated equation. If your business is facing barriers to getting credit, rest assured!
The point is that today there are options that offer different types of credit, evading traditional retail banks. Some of these modalities require the submission of a guarantor or guarantor, dispensing with the use of real guarantees, such as real estate, cars and the like.
Thinking about it, in today’s article, we will understand what is a guarantor and more: know what is a guarantor, who can be a guarantor, the difference between guarantor and guarantor and why your company needs a guarantor!
What is a guarantor?
The guarantor is the individual or legal entity that offers the necessary guarantees to financial institutions, on behalf of a company, through an endorsement. That is, the guarantor becomes financially responsible for the loan.
When applying for a loan, in the event of a possible payment problem, such as arrears and defaults, the guarantor is responsible for settling the debt or covering any arrears.
The guarantor can be called if the guarantor (borrower) delays payments or leaves some debt open.
By giving the guarantee for the loan to occur, the guarantor becomes as responsible for the amount due as the company that requested the credit.
What is an endorsement?
The guarantee is not a contract or an extra document. A guarantee is a unilateral act that expresses the guarantor’s willingness to place himself as responsible for the payment of some financial security.
In general, it is characterized by the signature on a security or credit agreement, accompanied by the term “by guarantee” or “in guarantee”.
The guarantee is not allowed to occur in any document apart from the title. The endorsement must appear on the title itself or at most on the back of the title.
Who can be a guarantor for business loans?
It is a very important factor to know how to select a guarantor for the credit application for your organization.
In addition to a relationship of trust between the borrower and the guarantor, it is important to check the reputation that he has in the market and the factors that can bring credibility to your loan application.
So your loan can be approved without major obstacles and bureaucracy.
After all, what does it take to be a good guarantor?
Both Individuals and Legal Entities can become guarantors.
In the topics below, we will know the basic requirements for the operation to take place successfully.
Individual Guarantor (PF)
It is essential that the guarantor has a good rating with the credit protection agencies.
Under these conditions, the guarantor must also have exchange capacity, that is, be of legal age and have no pending or restrictions on his behalf in the credit protection agencies.
When the guarantor is officially married, it is mandatory that the spouse agrees with the entire operation, otherwise, it is not possible to become a guarantor.