What are guarantees?

Very often, SMEs that have economically sound investment projects, but do not dispose of sufficient collateral, cannot get access to credit finance, or only insufficient funding.

A guarantee provided by a guarantee society on behalf of the SME to the bank replaces this missing collateral and enables the bank to grant the loan. In essence, the guarantee is a financial commitment by the guarantee society to repay up to a certain percentage of the loan to the financial institution in case the SME customer should not be able to honour his payments.

The guarantee usually does not cover more than 80% of the bank loan, leaving 20% of the risk with the lender. The SME remains liable for the loan.

The SME customer usually pays a once-off processing fee and an annual guarantee fee, which are variable from guarantee institution to guarantee institution.

For more information on the terms and conditions of the guarantee institutions in the different countries, please consult the section of the AECM member organisations