First, financing guarantee is mainly manifested in two aspects.
1, the guarantee of things
It is mainly manifested in the mortgage and control of project assets, including the mortgage of real estate (such as land and buildings). ) and tangible movable property (such as machinery and equipment, finished products, semi-finished products, raw materials, etc. ) and the establishment of security interests in intangible movable property (such as contractual rights, company bank accounts, patent rights, etc.). ). If the debtor fails to perform the debt, the creditor may exercise his rights on the collateral to pay off his creditor's rights.
There are two forms of security:
(1) Mortgage: The ownership of an asset is transferred to the creditor (mortgagee) for the purpose of providing guarantee, but with an express or implied condition that the ownership of the asset is transferred to the debtor again after the debtor performs its obligations.
(2) Guarantee: This form does not require the transfer of possession or ownership of assets and rights, but an agreement between creditors or debtors.
2, people's guarantee
The promise is made in the form of legal agreement, and the guarantor assumes certain obligations to the creditor. Obligation can be a secondary legal commitment, that is, if the guarantor (the principal debtor) fails to perform his obligations to the creditor (the beneficiary of the guarantee) (in case of default), he must assume the contractual obligations of the guarantor. If the project investor acts as a guarantor, the project investor will manage the project and arrange financing by establishing a special project company.
Second, the role of financing guarantee companies
1, to help banks increase interest income and pass on the risk of bad debts.
2. For borrowers in urgent need of funds, especially small and medium-sized enterprises, financing guarantee companies can meet their capital needs in the initial stage or growth stage.