Local governmental loan guarantee
Garantiqa offers its services for local governments, local governmental associations, multi-purpose small region associations (hereinafter referred to as: local governments), which are willing to participate in development procedures, but for accessing the resources they do not have the necessary collateral.
The Garantiqa Local Governmental Guarantee (absolute guarantee) is member of the Garantiqa product range, which enables the local governmental enterprises to access the available resources with a safe criteria system at a low guarantee fee.
Garantiqa Local Governmental Guarantee is available for loan transactions.
In what forms can be the Garantiqa Local Governmental Loan Guarantee requested?
- Proportionate guarantee: absolute guarantee stated in % value with respect to the capital and interest payment obligation arising from a loan.
- Guarantee with a fixed amount: absolute guarantee with a fixed guarantee amount.
What are the advantages of Garantiqa Local Governmental Guarantee?
- Such local governmental enterprises are also able to issue bonds, which without the absolute guarantee of Garantiqa would be unable to do so.
- The local governmental enterprise’s chance to access the resources increases; therefore it is able to accomplish larger projects.
- The terms and conditions of obtaining the loan will improve due to the absolute guarantee of Garantiqa
- The scope of physical collateral will decrease necessary for the loan application.
- Negotiable real estates, as property collateral can be used for other purposes, if necessary they can also be marketed. By this new opportunities of asset management become available.
- If the local governmental enterprise due to the business’s temporarily financial difficulties is unable to pay the actual instalment, Garantiqa as guarantor delivers instead of the enterprise (cashing).
The cashing may take place in one amount – if the local governmental enterprise becomes insolvent, the bank terminates the entire loan and Garantiqa delivers instead of the enterprise. After that the debt settlement procedure commences.
The cashing procedure may be partial in the case of absolute guarantee with a fixed amount – if the local governmental enterprise is temporarily insolvent it is possible to enter into an agreement with Garantiqa, and in the frame of this agreement Garantiqa for a maximum of 2 year-period undertakes the payment obligation of the local governmental enterprise towards the bank. If after the expiration of the 2-year period the local governmental enterprise is able to settle its debt towards Garantiqa and after that it is able to settle the instalments towards the bank, no debt settlement procedure shall be initiated.
For what transactions can be the Garantiqa Local Governmental Guarantee requested?
- for EU tender own capital supplementary loans,
- for subsidy advance loans,
- for development and investment loans,
- for rescheduling existing loan collateral,
- for HUF and foreign currency loans.