Supporting businesses by reducing lender risk.
Meaning
Definition
A Credit Guarantee Scheme is a program where a third party (often the government) guarantees a portion of loans, especially for small and medium-sized enterprises (SMEs). This reduces risk for financial institutions when collateral is insufficient.How It Works
If a borrower defaults, the guarantor covers a percentage of the loan amount. This encourages banks to provide credit to eligible enterprises needing funds.Key Benefits
Benefits include easier access to credit for SMEs, fostering entrepreneurship, and promoting economic growth without requiring traditional security.Author
