Banking / Finance Law
Corporate Guarantee
A guarantee given by one company to secure the debt or obligation of another company, commonly used within group companies or joint ventures.
Corporate guarantees function similarly to a personal guarantee, but with a company standing behind the obligation, and generally require appropriate board approval given the significant financial exposure such a commitment can create for the guaranteeing company.
Lenders often require a corporate guarantee from a parent or group company when lending to a smaller subsidiary with a limited independent credit history.
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