100% Guaranteed Cheap Finance
This is a loan that is offered by professional lending institutions and banks under the agreement that in case the borrower fails to pay the loan, a governmental agency or a certain institution will purchase the guaranteed portion of the loan.
In other words, guaranteed cheap finance has a secured financial back-up from a specific institution. This guaranteed cheap finance is for specific purposes and are intended for specific sectors or specific groups of people.
There are various government institutions as well as non-government institutions that perform activities essential to nation-building by offering guaranteed cheap finance to certain groups of people. Typically, these are those people who could not expand their business due to lack or limited access of capital.
Guaranteed cheap finance is designed to help certain groups of people or sectors so that they can increase their production and thus expand their business. For example, groups of small farmers who have limited access to capital, due to the lack of collateral, can avail programmes like guaranteed loans which will help them get a loan and help them increase their production.
Normally, banks and lending institutions would not have extended large loans to small farmers who do not have properties that could serve as collateral. However, with the government programme of guaranteed cheap finance, banks and financial institutions can now be encouraged to extend loans to these small farmers to help them increase farm production. They are not risky to the banks, since the government guarantees payment of the loan no matter what.
