Borrowing money from a bank is a common transaction, the borrower must stand up to borrow or use a loan guarantee. However, many customers do not clearly understand this form of guarantee. So what is a loan guarantee? What are the regulations on bank loan guarantees? Please read the article below by SeABank for more detailed information!
What is a loan guarantee?
A loan guarantee is a commitment from the guarantor (a bank or credit institution) to the beneficiary (an individual or organization) to repay the debt to the beneficiary if they cannot perform/do not fully or timely perform their obligation to repay the borrowed amount.
Learn the concept of bank loan guarantees
Characteristics of bank loan guarantees
Loan guarantees have the following characteristics:
- Issued in the form of a letter of guarantee.
- The main content of the letter of guarantee is that the guarantor will commit to pay the loan debt to the borrower if they cannot or do not have the ability to pay the loan debt and interest to the bank.
- The loan guarantee may cover all or part of the loan, including principal, interest, penalties and certain other costs.
What are the regulations on bank loan guarantees?
Regulations on bank loan guarantees are stipulated by law as follows:
- In case the guarantor needs to perform the responsibilities and obligations of the guarantee but the beneficiary exempts the guarantor from performing the obligations, the guaranteed party does not need to perform the responsibilities and obligations towards the beneficiary (except in cases where there is an agreement or the law has other provisions).
- If multiple parties jointly guarantee for an individual/organization, only one party is exempted from the guarantee liability. This means that the remaining parties still perform the guarantee liability according to the original commitment.
- If one of several joint sureties releases the guarantor from performing its obligations and responsibilities towards them, the guarantor must still perform the remaining obligations towards the other joint sureties.
The law clearly stipulates payment guarantees at banks.
In addition, Article 44 of Decree 21/2021/ND-CP provides the basis for the guarantor to fully perform its obligations. This includes the following specific cases:
- The borrower fails to make timely or early payments as agreed.
- The borrower fails to make full payments on the loan amount.
- The borrower fails to comply with the agreed commitment.
- The borrower is unable to repay the loan.
- All of the above cases are determined based on the agreement of the parties.
Prestigious bank loan guarantee service at SeABank
Capital is a key issue for individuals and organizations planning to do business. If you are looking for an effective financial solution, SeABank's reputable loan guarantee service is the best choice for you! With many years of experience in the financial sector, SeABank will bring you a comprehensive financial solution as follows:
Ensuring reputation for quality and competitive advantage
- Payment guarantee commitment: Ensuring the reliability of individuals and businesses with partners and suppliers contributes to building trust throughout the cooperation and business process.
- Easy Loan: Helps access loans easily, opening up many investment and development opportunities.
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Providing a flexible financial solution
- Diverse collateral: Many collaterals are accepted such as inventory, real estate, means of transport, etc., well meeting the loan guarantee needs of individuals and businesses.
- Competitive guarantee fees: At SeABank, we offer competitive and reasonable fees for most businesses to optimize operating costs.
Dedicated consulting service
- Simple procedure: Transparent and fast application review process.
- A team of experienced and well-trained specialists are always ready to answer customers' questions. At the same time, the specialists always provide the most reasonable solutions for the needs of the business.
Loan guarantees help businesses ensure financial matters in business operations. Therefore, it is very important to understand the nature of loan guarantees before businesses decide whether to use this service or not. In addition, knowing clearly regulations on bank loan guarantees. It is also an important factor to help businesses prepare documents carefully before requesting a guarantee.
SeABank is committed to always providing customers with the most prestigious and professional services. Contact SeABank immediately via hotline 1900.599.952 or on the website for detailed advice on guarantee services for individuals and businesses.
