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Affordable micro-finance programmes have historically shown very high repayment rates, usually 97%+. At 1to4, we look to further reduce the risk and exposure of our Guarantors through:
Rigorous due diligence on all MFI loan applications.
Diversifying our loans across the world avoiding over-exposure in any one region.
Sharing the default risk on a pro-rata basis over the entire pool of Guarantors. In the event of an MFI default, each Guarantor bears the pro-rata loss on a tax-deductible basis (consult your tax advisor).
Actively expanding the Guarantor programme. As the risk is shared pro-rata, each additional Guarantor joining the programme reduces each current Guarantor’s individual risk exposure.
Leaving the Guarantor’s assets to work “normally” for the benefit of the Guarantor. Guarantors do not realise a return on the guarantee risk, but do maintain complete control of their assets, thus receiving all investment returns from their portfolios.