The advantages of mutual guarantee come from the property right structure of private guarantee, community mutual assistance, mutual supervision and mutual guarantee mechanism. In the face of risks, the usual practice of policy guarantee institutions is to transfer the risks to the government, while the risks borne by mutual guarantee institutions are ultimately shared by members, which is easy to be accepted by potential guarantors, and the guarantor approver and the guarantor applicant know each other better, thus alleviating the problem of information asymmetry; Mutual guarantee transforms the external supervision of banks or government guarantee institutions into the internal supervision of mutual guarantee institutions, which improves the effectiveness of supervision; Private small and medium-sized enterprises at a disadvantage are linked by mutual guarantee, and they can get more favorable loan conditions when negotiating with banks; Mutual insurance reduces the financial burden of the government, creates a new communication channel between the government and private small and medium-sized enterprises, and is easily supported by the government. In order to meet the needs of future economic development, we should vigorously promote the construction of financing service structure system based on mutual guarantee institutions, supplemented by policy guarantee institutions and commercial guarantee institutions, supported by regional and municipal, provincial and national re-guarantee institutions, and supported by the All-China Federation of Industry and Commerce, its industry chambers of commerce and grass-roots chambers of commerce.
Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.