What is the guarantee?

Definition of guarantee
What is a bankable file?
The different types of guarantees

In the proper sense of the term, it is the obligation incumbent on a person either to ensure for another the enjoyment of a thing or a right, or to protect him against damage to which he is exposed, or to compensate it when it has actually suffered the damage; liability incumbent on one of the contracting parties.

In finance, a guarantee, collateral or security, and a promise of guarantee, used to cover the credit risk during financial transactions in the event that the beneficiary of the latter cannot meet his payment obligations.

Financial guarantee is a form of financial protection offered by a company or institution to cover possible financial losses for the customer or users in cases such as insolvency or bankruptcy. This can be a bank guarantee, warranty insurance, delivery guarantee or quality guarantee for purchased goods and services. Financial security can help protect consumers and investors against financial risk.

The financial guarantee is a type of guarantee that provides reimbursement or financial compensation in the event of non-compliance with contractual obligations or non-delivery of the service promised in the context of a commercial transaction. This can include guarantees for online purchases, security deposits for real estate rentals, guarantees for construction projects, etc. The financial guarantee aims to protect the financial interests of the parties involved in the transaction.

An example of a financial guarantee is a bank guarantee, which is a promise by a financial institution to cover the financial obligations of a company in the event of its default. Another form of financial guarantee is credit insurance, which guarantees the payment of a company’s invoices in the event of its default. Companies may also offer money-back or satisfaction guarantees, which guarantee the customer a refund or exchange in the event of dissatisfaction with a product or service.

• Said of securities fulfilling the conditions required to be rediscounted with a central bank.

• Project likely to be financed by an investor.

• A bankable dossier is a set of documents and information that allows a bank to determine the viability of a project or business and to decide if it is ready to grant it financing. This record may include financial information, such as historical and projected financial statements, cash flow forecasts, business plans, profitability analyses, etc. It may also include information about key people involved in the project or business. The objective of a bankable file is to provide the bank with a clear and complete picture of the financial and operational situation of the company or project so that it can make an informed decision on the granting of financing.

• A bankable record is a term used to describe a loan or financing application that meets the credit and solvency criteria required by a bank or financial institution. A bankable record typically includes information about the applicant, such as financial history, income, and expenses, as well as information about the business or project for which funding is requested. Banks use this information to assess the ability of the applicant to repay the loan and the risk associated with granting the loan. A complete and solid bankable file can increase the chances of obtaining a loan or financing.

• A sample bankable case for a business might include the following:

1. A detailed presentation of the project, including business objectives, growth strategies, associated costs and funding sources
2. Recent financial statements, such as balance sheets and income statements, to show the current financial health of the business
3. Short-term and long-term financial projections to show the company’s ability to repay the requested loan
4. An analysis of the company’s key resources and skills, including the work history and experiences of managers and key employees
5. Information on the financial guarantees available, such as bank or personal guarantees, to guarantee the repayment of the loan
6. Market and competitive information to show the viability of the project and the company’s ability to grow and succeed in its industry
7. Professional references to strengthen the credibility and solidity of the company
   It is important to note that the credit criteria and information required may vary depending on the bank or financial institution and the type of loan or financing requested. A strong bankable record can help convince a bank or financial institution to provide a loan or financing, but it is not guaranteed that the financing will be granted.

Individual guarantees

• The individual guarantee guarantees a loan granted by a partner of the lending institution to a single borrower whose identity is known.
• The individual guarantee is a form of financial guarantee that guarantees the repayment of credits or loans in the event of default by the borrower. It implies that the borrower stands personally as guarantor for the repayment of the loan and that his personal assets can be seized in the event of default.
• Individual collateral is often required for small loans or high-risk loans, such as high-interest loans or loans for small businesses. This form of security can offer some protection to lenders in the event of borrower default, but can also have financial consequences for the personal borrower in the event of default.

Portfolio guarantees

• This is a facility to guarantee a portfolio of new loans granted by a partner financial institution to eligible borrowers for whom the parameters have been defined without knowing a priori the identity of the borrowers.
• Portfolio guarantees are forms of financial collateral used to cover loan or credit portfolios. They are often used by financial institutions to minimize the risk associated with a large number of loans or credits.
• Portfolio guarantees can include financial guarantees or insurance to cover losses in the event of borrower default. They may also include financial instruments such as collateralized securities or collateralized bonds to cover losses.
• Portfolio guarantees may also carry additional costs for borrowers.

Fundraising guarantee

• The purpose of this guarantee is to facilitate the raising of funds by a financial institution with a view to increasing its activities with SMEs.
• The fundraising guarantee is a form of financial guarantee that guarantees that the funds necessary to carry out a project will be available. It is often used for real estate projects, construction projects and development projects.
• The fundraising guarantee can be provided by a financial institution, an insurance company or a bank, and guarantees that the necessary funds will be available for the project, even if the financial conditions become uncertain or unstable.
• This form of guarantee can be used to reassure investors and other parties involved in the project that the necessary funds will be available for the realization of the project, even in the event of financial or economic challenges.

Capital guarantee

• This guarantee covers the loss of capital (equity or quasi-equity) invested in small and medium-sized enterprises.
• The purpose of the equity guarantee is to catalyze alternative sources of financing and to contribute to strengthening the equity of SMEs which cannot access bank loans due to the weakness of their equity.
• Equity guarantee is a form of financial guarantee that guarantees that the company will have sufficient equity to cover its financial obligations and potential losses associated with its activities. Equity is funds held by the business that are separate from debts and liabilities, and can be used to cover losses or to invest in new opportunities.
• The equity guarantee can be provided by a financial institution or an insurance company, and guarantees that the company will have the necessary funds to meet its financial obligations, even if economic conditions or market conditions become uncertain.
• This form of guarantee can be used to reassure investors and other parties involved in the business will be financially stable, even in the face of economic or financial challenges.

Market guarantee

• The surety on the market can be defined as a commitment by signature issued by a bank or an insurance surety, on behalf of a construction or industrial company, in order to guarantee the execution of a contract, or the payment of an obligation, for the benefit of the originator.
• The market guarantee is a form of financial guarantee which guarantees that the investments will be protected against market fluctuations. It is often used for financial products such as mutual funds or derivatives, and ensures that investments will not be affected by declines in market value.
• The market guarantee can be provided by a financial institution or an insurance company, and guarantees that the investor will have a certain level of protection against market fluctuations.
• This form of collateral can be used to reassure investors who wish to minimize the risks associated with market fluctuations, but may also carry additional costs for investors.
• A market guarantee is a form of financial guarantee that guarantees that market conditions will be favorable for a project or business. It can be used to hedge risks associated with fluctuations in commodity prices, interest rates, currencies or other market factors.
• The market guarantee can be provided by a financial institution, an insurance company or a bank, and guarantees that the market conditions will be favorable for the project or the company, even if the market conditions become uncertain or unstable.