What is a guarantee?
A guarantee is a surety, which the Rural Development Foundation (RDF) issues for the debt obligation of an entrepreneur (loan, leasing, etc).
What are the guaranteeing principles and how to apply for a guarantee?
An entrepreneur may have several reasons which prevent it from receiving a loan from a bank. Substantial problems may include an insufficient amount of collateral property or that it is more difficult for a starting entrepreneur to win the trust of a bank. In such a case, the guarantee from the RDF facilitates the receipt of a loan.
If you wish to receive a guarantee from the RDF, i.e. assistance from the state, for you loan, your informing the lender is sufficient. The extent of the guarantee necessary for a particular loan is decided by the bank which also submits a corresponding application to the RDF. An entrepreneur does not need to perform any additional operations. However, upon using the guarantee of the RDF it must be borne in mind that the guarantee does not release the entrepreneur from proprietary liability. The entrepreneur holds primary liability for the loan obligation which must be also secured with one?s own property or a personal surety must be provided to the bank. If for any reasons the business of the entrepreneur fails and the pledged property of the borrower is not sufficient for deleting the loan residue, the RDF will pay the bank the agreed amount of the guarantee.
Requirements for applying for a guarantee
A guarantee can be received by a small and medium-sized enterprise registered on the basis of the legislation of the Republic of Estonia. It is important that the entrepreneur does not have arrears before the Tax and Customs Board, and that the entrepreneur does not have any financial difficulties and is able to perform the obligations arising from the loan agreement.