Document background
The Loan Guarantee Agreement is a critical financial instrument in South African commercial practice, used when a third party agrees to guarantee the repayment obligations of a borrower under a loan facility. This document is essential when lenders require additional security beyond the borrower's own covenant, particularly in cases where the borrower's creditworthiness alone is insufficient or when corporate group structures necessitate parent company support. The agreement must comply with South African legislative requirements, including the National Credit Act 34 of 2005, the Financial Intelligence Centre Act, and the General Law Amendment Act's provisions regarding written guarantees. It typically includes comprehensive details about the guaranteed obligations, enforcement mechanisms, and the guarantor's undertakings, while incorporating necessary consumer protection elements where applicable. The document is particularly relevant in corporate financing, project finance, and property transactions where guaranteed obligations are a key component of the security package.
