Loan Guarantee

PIDB collaborates with other financial institutions in the respective member countries such as National Development Bank of Palau, Commonwealth Development Authority, Guam Economic Development & Commerce Authority, FSM Development Bank, and the commercial banks. Most of these organizations share a similar mission and objective as PIDB.

A Loan Guaranty, in simple terms, is a guaranty offered by a bank against a loan granted by another bank. In the event of default, the guarantor shall honor and pay back the guaranteed loan amount to the lender and then seek any and all remedies to collect its money from the borrower. Typically, a bank would guaranty up to 80% of the loan amount.

When applying for loans from any of the above lending institutions, PIDB may consider and offer its guaranty thereby improving the chances of loan approval. The reverse has also been applied where PIDB approved loans with guaranty from any one of the above institutions. The terms and conditions of any guaranty offered by PIDB are negotiated with the lending banks and concurred to by the borrower.

Procedure:

  1. Submit your loan application and business proposal to any of the lending institutions or commercial banks in your respective locations.
  2. If that bank requires a guaranty, then the same application and business proposal must be submitted to PIDB for review.
  3. If PIDB approves the guaranty, it will notify the primary lender, and terms and conditions are negotiated.
    Loan documentation, closing, and disbursement then follow.

Fees
In addition to the closing fees, the borrower pays the guarantor a guaranty fee of 1% of outstanding loan amount annually.