// definition
Loan guarantee
A guarantor’s commitment to lenders
Short definition
A guarantor’s commitment to lenders covering a loan’s default risk within the contract’s scope. Banks advance funds when the borrower draws the loan, and the borrower remains liable for repayment. The guarantor’s payment depends on the claim conditions. A public guarantee creates a contingent commitment, with any cash payment subject to its terms.
risk atlas
Knowledge map
Intuition
Lenders advance the money, the borrower owes repayment and the guarantor steps in under the contract’s conditions.
Related analyses
Primary sources
- UKEF, Export Development GuaranteeOverview and Cost: commercial credit, risk sharing and premium.
- Peter Kyle, letter of 13 October 2025Page 1, paragraphs 1a–b; page 3: loan, guarantee and public commitment are distinct.