Guarantors: What You Need to Know
Every one of our loans is interest-free and fee-free. For most loans, instead of collateral, we rely on something better: a person who believes in you. That person is called a guarantor.
Mini-Loans of $1,000 or less generally do not require a guarantor.
Guarantors are the heart of HFLA’s success.
By standing behind a borrower’s commitment to repay, guarantors help make interest-free lending possible.
A loan backed by someone who knows you carries a different kind of accountability than a loan backed by a bank.
Information for Loan Applicants
Who can be a guarantor?
A guarantor is typically a relative or someone who knows you well and has an established relationship with you. They should understand your circumstances, have confidence in your ability to repay the loan, and be financially able to take responsibility for the loan if necessary. A spouse or partner cannot serve as your guarantor.
What to expect from the process
Once you've identified a guarantor, they'll complete a short Guarantor Form. If your loan is approved, they'll review and sign the Guaranty. The borrower remains responsible for making the loan payments; HFLA contacts the guarantor if needed under the terms of the Guaranty.
How to talk to a guarantor
Most people find this part more daunting than it needs to be. Asking someone to be your guarantor means asking them to believe in your plan to repay, just as you do. Be upfront about the loan amount, what it's for, and your repayment plan. The clearer you are, the easier the conversation.
Information for Guarantors
What does it mean to be a guarantor?
A guarantor agrees to repay an HFLA loan if the borrower does not repay it as agreed. The borrower is responsible for making the regular monthly payments, but serving as a guarantor is an important financial commitment.
Why do we ask for financial information?
Because a guarantor may become responsible for repaying the loan, HFLA needs to confirm that taking on that obligation would be financially manageable. The Guarantor Application asks about income, assets, debts and expenses and requires supporting documentation.
Before you agree
Make sure you understand the amount you are guaranteeing and would be financially able to repay that amount if necessary. You'll have an opportunity to review the Guaranty before signing and can contact HFLA with any questions.
Frequently asked questions
The Bottom Line
Serving as a guarantor can help someone access an interest-free loan while helping HFLA preserve funds for future borrowers. It is also a real financial commitment. Before agreeing, make sure you understand the amount you are guaranteeing and are comfortable taking responsibility for it if necessary.
Questions?
Questions are welcome. Please contact HFLA if you would like to discuss the guarantor process or your responsibilities before agreeing to serve.
office@hflawa.org | 206-397-0005