What are Guarantee Societies ?

Given the importance of SMEs in the European economy and their difficulties in accessing loan finance, guarantee organisations have been set up in nearly all EU Member States as well as Turkey. They are active as non-profit organisations at national, regional or local level. Four main typologies exist: Mutual Guarantee Societies, other types of Private Guarantee Societies, Public guarantee institutions and Public-Private Partnership initiatives. The specific choice for one or the other model reflects the economic and legal frameworks of the respective countries.

Mutual Guarantee Societies are private guarantee institutions created by beneficiary SMEs. They typically have a cooperative or mutual statute. This means that the MGS' capital is provided directly by the SMEs that apply for a loan guarantee in form of cooperative or mutual shares. Each members has an equal voting right and participates in electing the General Assembly and Board of Directors. The Mutual Guarantee Societies are usually run by entrepreneurs, bringing an SME perspective to the risk asessment process.

Other types of Private Guarantee Societies are founded as initiatives by representative organisations of the private sector (Chambers of Commerce or Crafts, Business Federations, Banking organisations, etc.). They have a joint-stock company statute, foundation statute or other. The capital is provided by the private shareholders.

Public Guarantee Institutions have been set up by public authorities in a number of countries. They are legally independent entities and can chose from a variety of statutes, e.g. development bank, development fund, etc. They are entirely funded and run by public shareholders. They implement public SME support policy and either guarantee SMEs directly or provide counter-guarantees to private Guarantee Societies.

In some cases, Guarantee societies have chosen a Public-private partnership model, where the public shareholder usually holds a minority stake.

Independent from their legal statutes, a great majority of AECM members have a statute of financial intermediary or a mono-line banking lisense. They are thus subject to financial supervision by their national authorities.

• Guarantee products and services
• How to apply for a guarantee
• Added value provided by Guarantee schemes to SME's and to bankers
• Public support and counterguarantees
• Madrid Declaration