When a credit institution conducts a loan risk analysis, the analysis of the guarantee provided by the borrower is a very important matter. As a second source of repayment, when there is a problem with the borrower's first source of repayment, the guarantee can play a role in diversifying and compensating the loan risk, in a sense, the guarantee can be said to be the insurance that the credit institution buys for itself! However, as a secondary source of repayment, although the guarantee measure disperses the loan risk, it cannot fundamentally eliminate the loan risk, and it cannot replace the credit analysis of the borrower, and from the perspective of practice, once the borrower's primary source of repayment has a problem, the credit institution's claim for the security right will often not be very smooth, and it will cost a certain amount of manpower and material resources. In this article, I will take the liberty of briefly discussing some of the key points of loan security analysis.
1. How to understand the guarantee?
Guarantee refers to an economic behavior in which the creditor provides a performance guarantee or assumes the corresponding guarantee liability with property or credit to ensure the realization of the creditor's rights in order to prevent the risk of the debtor's default and reduce the loss of funds in economic and financial activities. In accordance with the provisions of Article 1 of the Security Law, this Law is enacted in order to promote financial integration and commodity circulation, ensure the realization of creditor's rights, and develop the socialist market economy. According to this provision, guarantee is a system for guaranteeing the realization of creditor's rights, and the core function of guarantee is to guarantee the realization of creditor's rights.
According to the provisions of the Guarantee Law, there are five statutory guarantee methods, guarantee, mortgage, pledge, deposit, and lien, and in the credit business, there are mainly three types of guarantee methods: guarantee, mortgage, and pledge. (Regarding the specific definition of deposit and lien, as a basic knowledge, readers should consult the relevant provisions of the Guarantee Law on their own)
2. The role and limitations of loan guarantees
(1) The role of loan guarantees
The biggest risk faced by credit institutions is the default risk of the borrower, and the guarantee measure is widely used as an important means of diversifying the risk, and the guarantee system is an important system to ensure that the creditor's rights can be realized. As a secondary source of repayment, the security of the loan can be effectively guaranteed, and when the borrower's primary source of repayment has a problem, the credit institution can realize the creditor's right by asserting the security right. Loan guarantees greatly promote the development of capital lending and financing by guaranteeing the security of the lending relationship. Without guarantees, the development of the market and credit will become empty words.
In addition, if a guarantee measure is set up, once the borrower defaults, the creditor can exercise the mortgage right, pledge right or require the guarantor to bear the guarantee liability according to the contract, and the borrower will always have pressure to perform the contract during the performance of the loan contract, so the guarantee measures can effectively increase the borrower's default cost, and the higher the borrower's default cost, the stronger the willingness to repay.
(2) Limitations of loan guarantees
In addition to the above-mentioned functions, security measures also have certain limitations:
First, security measures are not a substitute for assessing the creditworthiness of the borrower
Generally speaking, a normal loan depends on two factors, the borrower's ability to repay and willingness to repay, among which the ability to repay is an objective factor and the willingness to repay is a subjective factor, both of which are indispensable. In order to effectively assess the borrower's willingness and ability to repay, we need to investigate and understand the borrower, and generally ask the customer to provide corresponding guarantees. However, as far as the guarantee is concerned, it is only a secondary source of repayment, and the credit institution should focus on the primary source of repayment, focusing on the borrower's primary source of repayment, and the borrower's cash flow and ability to continue as a going concern. Guarantees are not a substitute for an assessment of the borrower's creditworthiness
Many credit institutions and relationship managers have a misconception and belief that it is safe to borrow with sufficient collateral or a strong guarantor, which is very wrong. A good account manager must abandon this kind of thinking, and focus on the company's own business conditions and sustainable development ability compared to the guarantee method, focusing on the borrower's primary source of repayment and cash flow, especially small and micro enterprise loans.
Second, having a loan guarantee does not guarantee that the loan will be recovered, and even if it can be recovered, it will cost a lot of manpower and material resources
In practice, once it comes to the realization of security rights, whether it is the disposal of the collateral or the requirement for the guarantor to bear the guarantee liability, it is often not too smooth, and it is very common for the collateral to be seized and the collateral cannot be realized for a long time, especially through judicial procedures, which often consumes a lot of manpower and material resources and takes a long time. As a credit institution, practitioners should be soberly aware that with the loan guarantee industry, it is not necessarily possible to guarantee the security of loans.
3. Key points of guarantee assessment
(1) Overview of guarantees
Guarantee refers to the act of agreeing between the guarantor and the creditor that when the debtor fails to perform the debt, the guarantor will perform the debt or assume responsibility according to the agreement. A guarantee refers to a kind of guarantee made by a third party other than the debtor to the creditor for the performance of the debtor's obligations. It is a typical PICC and a typical contractual guarantee. The advantages of the guarantee are: first, it is simple to set up, and the contract can be signed; second, the guarantee liability extends to all the property of the guarantor; Third, for the convenience of exercise, the guarantor may be required to directly bear the guarantee liability. The disadvantages of the guarantee are: first, the creditor does not enjoy the priority right to be repaid to the property of the guarantor; Second, the guarantor may provide security to multiple creditors at the same time, and each creditor is on an equal footing; Thirdly, the guarantor's property can change at any time and may become insolvent. Generally speaking, in the loan business, the joint and several liability guarantee of the legal representative or actual controller of the enterprise is indispensable, but it is rarely used as the only security measure.
(2) Key points of assessment of guarantees
When analyzing the guarantee, it is necessary to pay attention to the following risk points:
1. The main qualification of the guarantor must be qualified
According to Article 7 of the Guarantee Law, "a legal person, other organization or citizen with the ability to repay debts on behalf of the guarantor may act as a guarantor." According to the provisions of the Guarantee Law and the Applicable <担保法>Interpretation, the entities that cannot act as guarantors to carry out guarantee acts include the following:
(1) State organs not approved by the State Council;
(2) Public institutions, social organizations and kindergartens for the purpose of public welfare. Including schools, kindergartens, hospitals, radio stations, television stations, etc.;
(3) the functional departments of the enterprise legal person;
(4) For a branch of an enterprise legal person without written authorization, the guarantee provided by the branch must be authorized by the head office and provided within the scope of authorization.
It is worth noting that there are two different situations in which public institutions and social groups can act as guarantors: (1) public institutions and social organizations for the purpose of public welfare. For example, schools, kindergartens, hospitals, etc. are not allowed to act as guarantors. The establishment of these institutions is for the purpose of public welfare services, and is public welfare and non-profit, so it is not appropriate for these institutions to participate in economic activities to guarantee the debts of others contrary to the purpose for which they were established
Those public institution legal persons or other organizations that have obtained the "Business License for Enterprise Legal Person", "Business License" or are allowed to engage in business activities by national policies. This kind of organization is not set up for the purpose of public welfare, and many public institutions and social organizations also carry out some business activities and have their own economic income. There are also some public institutions that have achieved enterprise management and are responsible for their own profits and losses. They have the capacity for civil rights and conduct to engage in guarantee activities, and can act as guarantors. Therefore, if a public institution or social organization engaged in business activities is the guarantor, the guarantee contract signed by the public institution or social organization engaged in business activities shall be deemed valid if there are no other circumstances that cause the guarantee contract to be invalid.
2. Analyze the compensatory ability of the guarantor
As the second source of repayment, the guarantor's ability to repay is the most basic requirement, and the credit institution should investigate and understand the guarantor's asset status, liabilities, income and expenses, etc., and analyze whether the guarantor's assets are easy to realize. The method of valuation of the guarantor is the same as that of the borrower. Changes in the guarantor's financial status, such as cash flow, contingent liabilities, credit rating, etc., directly affect its ability to guarantee.
3. Understand the reputation of the guarantor
Guarantee guarantee is also known as credit guarantee, the guarantor provides security for the debts of others with its own credit and the property in its name, and the guarantor's repayment at maturity mainly depends on its willingness to compensate and the ability to compensate. In addition to examining the solvency of the guarantor, the credit institution should also investigate and understand the creditworthiness of the guarantor. Credit institutions may investigate the creditworthiness of the guarantor through exchanges and external visits.
4. Comprehensively analyze the guarantor's ability to "restrict" the borrower
When the borrower is unable to repay the loan on time, the guarantor, as the second source of repayment, needs to repay the principal and interest of the loan on behalf of the borrower, and the guarantor is willing to provide guarantee for the borrower, which often has a "relationship" with the borrower. Through these "relationships", the borrower can be constrained and the borrower's willingness to repay can be effectively improved.
In practice, the relationship between the guarantor and the borrower is roughly divided into the following types: pure commercial (guarantee company and borrower), affiliated enterprises, enterprise mutual insurance, upstream and downstream customers, relatives and friends, etc.
5. Pay attention to the way of guarantee
There are two types of guarantees: general guarantees and joint and several liability guarantees. Article 17 of the Guarantee Law clearly stipulates that a general guarantee refers to a general guarantee where the parties agree in the guarantee contract that the guarantor shall bear the guarantee liability when the debtor fails to perform its obligations. The so-called right of first action defense means that the guarantor of a general guarantee may refuse to bear the guarantee liability to the creditor before the main contract dispute has not been tried or arbitrated and the debtor's property is still unable to perform the debt in accordance with the law. If the debtor of the joint and several liability guarantee fails to perform the debt upon the expiration of the debt performance period specified in the main contract, the creditor may require the debtor to perform the debt, and may also require the guarantor to bear the guarantee liability within the scope of the guarantee.
For credit institutions, it is more advantageous for them to choose joint and several guarantees.
Fourth, the key points of mortgage guarantee assessment
(1) How to understand mortgage?
Mortgage refers to a legal form in which the debtor or a third party does not transfer the possession of the mortgaged property and uses the property as security. The debtor or a third party who provides property security is the mortgagor, and the mortgagee, that is, the creditor, enjoys the right of mortgage. Mortgage refers to the right of the debtor or a third party to mortgage the property to the creditor without transferring the possession of the property in order to guarantee the performance of the debt, and the creditor has the right to be repaid in priority in respect of the property if the debtor fails to perform the due debt or the mortgage is realized as agreed by the parties. It can be seen from this that the mortgage right is a kind of priority right of repayment, which is the right directly enjoyed by the mortgagee in the thing, and can be against the owner of the thing or a third party.
(2) What are the common collaterals?
According to Article 280 of the Property Law of the People's Republic of China, the property that can be mortgaged includes:
(1) Buildings and other land attachments;
(2) the right to use construction land;
(3) Wasteland and other land contracting and management rights obtained by means of bidding, auction, public consultation, etc.;
(4) Production equipment, raw materials, semi-finished products and products;
(5) Buildings, ships, and aircraft under construction;
(6) means of transportation;
(7) Other property not prohibited by laws and administrative regulations.
According to Article 65 of the Detailed Rules for the Implementation of the Provisional Regulations on the Registration of Immovable Property, a mortgage on the following property may apply for registration of a mortgage on immovable property:
(A) the right to use construction land;
(2) Buildings and other land attachments;
(3) the right to use maritime space;
(4) Wasteland and other land contracting and management rights obtained through bidding, auction, public consultation, etc.;
(5) Buildings under construction;
(6) Other immovable property that is not prohibited by laws and administrative regulations from being mortgaged.
Where the right to use construction land or the right to use sea areas is mortgaged, the buildings and structures on the land and sea areas are mortgaged together; Where a building or structure is mortgaged, the right to use the construction land and the right to use the sea area within the scope occupied by the building or structure shall be mortgaged together.
Article 184 of the Property Law stipulates that the following property shall not be mortgaged:
(1) land ownership;
(2) Collectively owned land use rights such as cultivated land, homesteads, self-reserved land, and self-maintained mountains, except where they may be mortgaged by law;
(3) Educational facilities, medical and health facilities and other social welfare facilities of public institutions, social organizations such as schools, kindergartens, hospitals, etc.;
(4) Unclear or disputed property in ownership or right of use;
(5) Property that has been sealed, seized, or supervised in accordance with law;
(6) Other property that shall not be mortgaged as stipulated by laws and administrative regulations.
(3) Analysis and evaluation of mortgage guarantees
1. The collateral must be allowed to be bought and sold and mortgaged in accordance with laws and regulations. That is, the collateral must belong to the property that can be mortgaged as clearly stipulated in the Security Law and related laws. There are three ways to realize the mortgage right, discount, auction and sale, no matter which way, the ownership of the mortgage will change, and if the mortgage is to be realized, the mortgage must be exchanged, so the mortgage must be allowed to be bought and mortgaged in accordance with laws and regulations.
2. The collateral must be a specific property, and when setting up the mortgage, it is necessary to check the registration certificate of the mortgaged property, and pay attention to the nature, location, legality of the acquisition, whether the property right is clear, whether there are disputes, etc.
3. Analyze whether the valuation of the collateral is appropriate and whether the mortgage ratio is reasonable. The appraised value of the collateral is a very central issue, and the credit institution should take an appropriate approach to the valuation of the collateral and set the appropriate collateral ratio.
4. It is necessary to analyze whether the price of the mortgaged property is stable. The market value of good collateral is relatively stable and not prone to depreciation.
5. It is necessary to analyze whether the mortgaged property is easy to auction and realize. Since the collateral is a supplement to the primary source of repayment, when the borrower's primary source of repayment is insufficient and unable to repay the principal and interest of the loan, the borrower can only repay the principal and interest of the loan by disposing of the collateral. Ease of monetization is a very important factor.
6. Whether to handle mortgage registration
There are two types of claims on the validity of the registration of mortgages: the doctrine of registration requirements and the doctrine of registration confrontation. The doctrine of registration requirements means that the establishment of a mortgage must be registered in addition to the existence of a mortgage contract between the parties, otherwise the effect of the establishment of the mortgage will not be produced; The adversarial doctrine of registration means that the establishment of a mortgage right only requires the agreement of the parties to reach a mortgage. However, it does not have credibility for a third party, and if it is to be opposed to a bona fide third party, the mortgage can be registered. The mainland has adopted the principle of giving priority to the doctrine of registration requirements, supplemented by the doctrine of registration confrontation.
According to Article 187 of the Property Law, where a party mortgages the right to contract and operate land such as buildings and other land attachments, the right to use construction land, buildings under construction, or wasteland obtained through bidding, auction, public consultation, etc., the mortgage shall be registered, and the mortgage right shall be established at the time of registration, and if it is not registered, the mortgage shall not take effect.
According to Article 188 of the Property Law and Article 43 of the Security Law, if a party mortgages property other than the compulsory registration as prescribed by law, it may or may not register the mortgage, and whether to register the mortgage shall be decided voluntarily by the parties, and whether the mortgage is registered or not does not affect the establishment of the mortgage right, and the mortgage contract shall take effect from the date of establishment, and the mortgage right shall be established from the effective date of the mortgage contract. However, the validity of such a mortgage right without mortgage registration only exists between the parties to the mortgage contract, and does not produce credibility and cannot be used against a bona fide third party.
No matter what kind of collateral, it is recommended to go through the mortgage registration to obtain the mortgage right and achieve the effect against a third party.
5. Key points of pledge security analysis
Pledges are divided into movable property pledges and rights pledges. Movable property pledge means that the debtor or a third party transfers its movable property to the creditor for possession, and uses the movable property as security for the creditor's rights, and the creditor has the right to be repaid in priority when the debtor fails to perform the debt or when the parties agree to realize the security right. Among them, the debtor or a third party is the pledgee, the creditor is the pledgee, and the transferred movable property is the pledge. The rights arising from the legal relationship of movable property pledge are pledges. Pledge of rights is a form of security in which the transferable property rights other than ownership rights are used as the subject matter of the pledge to secure the creditor's rights. Pledges can be divided into two categories: chattel pledge and right pledge:
(1) Pledge of movable property
Movable property pledge means that the debtor or a third party transfers its movable property to the creditor for possession, and uses the movable property as security for the creditor's rights, and the creditor has the right to be repaid in priority when the debtor fails to perform the debt or when the parties agree to realize the security right. Among them, the debtor or a third party is the pledgee, the creditor is the pledgee, and the transferred movable property is the pledge. The rights arising from the legal relationship of movable property pledge are pledges.
(2) Pledge of rights
Pledge of rights is a form of security in which the transferable property rights other than ownership rights are used as the subject matter of the pledge to secure the creditor's rights. The following rights that the debtor or a third party has the right to dispose of may be pledged:
1. Bills of exchange, checks, promissory notes;
2. Bonds, certificates of deposit;
3. Warehouse receipts, bills of lading;
4. Fund shares and equity that can be transferred;
5. Property rights in intellectual property rights such as the exclusive right to use registered trademarks, patent rights, and copyrights that can be transferred;
6. Accounts receivable;
7. Other property rights that laws and administrative regulations provide may be pledged.
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