Personal Guarantees as Security

For individuals or community groups with little (or insufficient) collateral to secure a loan there is also the possibility of asking either friends and family or community members to provide personal guarantees

People who have confidence in both the borrower and the success of the project and are able to repay a guarantee if called upon, may guarantee a loan. After the loan has been approved each guarantor signs a copy of the Loan and Security Agreement (LSA) which contains a legally binding Guarantee. Each guarantor nominates the amount they wish to guarantee. Guarantees are limited to a minimum of $500 and a maximum of $5,000 per person and no more than 10% of the guarantor's personal income. By agreement this may be higher in some cases.

Along with the LSA each guarantor receives an information sheet about how guarantees work and what their obligations are as a guarantor. Guarantors are required to supply personal details on the last page of the LSA which remain confidential to Prometheus. Once the loan is advanced each guarantor will receive a copy of their signed and completed Loan and Security Agreement as part of the loan disclosure process.

Where a loan is fully secured by personal guarantees, 150% of the amount being borrowed is required in guarantees.