A guarantor supports another member’s loan under the SACCO’s contract and by-laws. This is a financial commitment, not a character reference. If the borrower defaults, the SACCO may pursue the agreed security and guarantor commitments subject to the applicable terms and law.
Before you guarantee
- Confirm the borrower, facility, approved amount and duration.
- Know the exact amount you are committing and whether it can change.
- Understand which deposits or benefits may be restricted while the guarantee remains active.
- Ask how repayments and arrears will be communicated to you.
- Read substitution, release and recovery procedures.
- Consider whether you could meet the obligation without destabilising your own finances.
During the loan
Keep the signed guarantee and monitor the commitment through official statements or member channels. A borrower’s assurance that “everything is fine” is not a substitute for the SACCO’s record. If contact details change, update them so warnings and notices reach you.
When the borrower struggles
Encourage early engagement with the SACCO. Restructuring, repayment arrangements or guarantor substitution are not automatic rights; they require the SACCO’s process and approval. Do not make informal side payments without obtaining an official receipt and written allocation.
Primary sources
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