Financial Assistance In Relation To A Loan Facility

When a bank approves a loan facility, it will typically require the registration of a mortgage bond over the borrower's immovable property in order to secure the debt.

More often than not, the loan facility will require security in addition to the mortgage bond, typically in the form of a guarantee or surety given by a third party (who is related to the borrower) in favour of the bank for the debts of the borrower.

This phenomenon constitutes the granting of financial assistance and is common in mortgage-backed loan facilities. In practice, other forms of financial assistance include scenarios where the third party guarantees in favour of the bank the due performance of the borrower's obligations to the bank, where the debit order is debited from the third party's bank account, or where the third party undertakes to fund cashflow shortfalls in favour of the borrower.