A guaranteed loan (Swedish: borgenslån) is a loan secured by a guarantee: a guarantor, such as a shareholder or a parent company, undertakes to pay if the borrower cannot. Guaranteed loans are common in smaller limited companies, where owners often personally guarantee the company's loans.
An alternative is other security, such as a pledge of shares. A pledge must be noted in the share ledger, whereas a guarantee is a personal undertaking that is not noted there. Lenders often assess the collateral value.
A pledge of shares means shares are provided as security for a debt, often a loan.
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Collateral value is the maximum value up to which an asset, such as a security, can be borrowed against.
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A shareholder contribution is capital an owner injects into the company without receiving new shares.
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A limited company is a business form that is its own legal entity and is owned through shares.
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