To guarantee the repayment of loans granted, creditors (banks or other) may request guarantees, also referred to as pledges, from the debtor. With respect to guarantees, a distinction can be made between:
- essential guarantees;
- mutual guarantees resulting from the general right of lien;
- other guarantees.
Essential guarantees are those without which loans are rarely granted. They focus, on the one hand, on the debtor’s solvency and, on the other, on the solvency of the project to be financed:
- the solvency of the debtor - whether in the case of a natural or legal person - is based, inter alia, on the balance sheet as well as on the integrity and skills of the entrepreneur/manager;
- the solvency of the project mainly concerns profitability, expansion opportunities and the capital available.
Mutual guarantees represent guarantees which relate to the debtor’s assets. They belong to all creditors to guarantee the repayment of their claim. Creditors have equal status with respect to exercising their right over this guarantee, regardless of the date of their claim.
In order to encourage the granting of credit, the law has also made other forms of guarantee, in addition to the general right of lien, available to creditors. These aim to reduce the risk incurred by creditors by allowing them to be repaid first from the proceeds of the sale of certain assets. Guarantees which can be used to guarantee commitments with respect to financial institutions can generally be divided into 3 main categories:
- tangible guarantees, which involve movable or immovable assets;
- personal guarantees, which consist of a right in personam;
- moral guarantees, which are based on the simple promise of the debtor to do or refrain from doing something.