Loan Guarantees—A Complete Clean Energy Finance Guide


Clean Energy Finance Solutions Center
Clean Energy Finance Solutions Center

This resource—which is one of many instrument summaries offered by the Clean Energy Finance Solutions Center—provides in-depth information about loan guarantees, including best practices, case studies, design and implementation information, experts and training opportunities.

Loan guarantees are financial mechanisms that provide assurance to a lender that loans will be fully or partially repaid in the event of borrower default. Loan guarantees redirect some or all of the credit risk away from a project and onto the entity providing the guarantee. Assuming the entity guaranteeing the loans is highly rated and credit worthy, this should result in a lower cost of capital, even after factoring in the fees associated with the guarantee itself. In the case of partial guarantees, the resulting risk profile may be a blend of the underlying project risks and the strength of the entity providing the guarantee.