In practice of crediting of small-scale business by the first whom the bank arranges as the guarantor on a borrower’s credit is the spouse of the client. The property acquired by spouses during joint life, belongs to both of them.
Hence, in case of non-execution of credit obligations by the direct borrower, debt recovery on a judgement can be imposed on common property of spouses.
Arranging the spouse as the guarantor under the credit, the bank is insured twice. First, that the spouse, signing the guarantee contract not only confirms the consent to actions of the second spouse, but also, secondly, itself represents as the guarantor under its obligations. Thus, it allows to lower probability of corresponding problems at collecting circulatuion on personal property of both spouses.
The described situation is characteristic for those cases when all activity is led by the individual businessman. Besides spouses guarantors banks can arrange the persons directly participating in business on a level with the official owner. For example, when in business some real owners, but only one of them is registered as the individual businessman.
Or in cases of the so-called connected companies when a little different businesses officially arranged on different persons are the same owners connected among themselves.
In a case when as the borrower under the credit the juridical person acts, as guarantors under the credit are usually arranged all its proprietors. Registration by guarantors of all proprietors is an ideal variant.
However some proprietors are frequent in the enterprise have different shares, including shares of some proprietors can constitute all some percent or some tenth percent. Then guarantee contract signing only the basic proprietors of the enterprise is possible, but it isn’t the standard rule.
The admissibility of the similar approach at registration by guarantors not all proprietors of the enterprise in each specific case is determined by legal service of bank, taking out the decision on credit committee.
In programs of crediting of small and average business without pledge the guarantee is the basic form of provision of the given out credits. However with rare exception the basic volume of a credit portfolio of any bank on small and average business is constituted by the credits provided not only the guarantee, but also pledge.
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