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Business Definition for: guarantor

Dictionary of Banking Terms
guarantor

  1. person or corporation who guarantees payment by another. Also known as a surety . A guarantor becomes a co-endorser and assumes liability in event of default.
  2. corporation that provides assurances, either through a letter of credit or the strength of its own balance sheet, to step in and pay the outstanding obligation of, for example, a municipal bond issuer.See also financial guarantee .
  3. Federal Home Loan Mortgage Corp. mortgage swap in which mortgage lenders exchange loans for Freddie Mac Participation Certificate (PC) .

Dictionary of Business Terms
guarantor

one who guarantees, endorses, or provides indemnity agreements with respect to debts owed to others. Any losses are deductible when sustained.

Dictionary of Insurance Terms
guarantor

term in surety coverage. Through the issue of a surety bond, a surety company is in effect the guarantor.

See also surety bond
Related Terms:
surety bond

agreement by an insurance company to take the place of a defaulted contractor in a development project, and take corrective action, if necessary, to finish the project. The insurance company also may be compelled to pay for damages resulting from default. Surety bonds commonly are required on municipal development projects financed by general obligation bonds or revenue bonds. A surety bond also is required to put a stoppayment order on an official bank check, such as a cashier's check, Also called an indemnity bond.

Referring Terms:
start-up financing
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