The Business Loan Guarantee agreement is a crucial financial instrument in South African commercial practice, used when a lender requires additional security for a loan facility provided to a borrower. This document is essential when the borrower's creditworthiness alone is insufficient to secure the loan, or when the lender's risk assessment policies require additional security. The agreement must comply with South African banking regulations, the National Credit Act (where applicable), and common law principles of suretyship. It typically includes comprehensive details about the underlying loan, the extent of the guarantee, enforcement mechanisms, and the rights and obligations of all parties. The document is particularly important in commercial financing transactions and must be carefully drafted to ensure enforceability under South African law while protecting the interests of all parties involved.

1. Parties: Identifies all parties to the agreement: the Creditor (Lender), Principal Debtor (Borrower), and Guarantor(s)

2. Background: Sets out the context of the guarantee, including reference to the underlying loan agreement and the purpose of the guarantee

3. Definitions and Interpretation: Defines key terms used in the agreement and establishes interpretation rules

4. Principal Debt: Describes the underlying loan agreement and debt being guaranteed

5. Nature and Extent of Guarantee: Specifies the type of guarantee (conditional/unconditional) and the maximum amount guaranteed

6. Duration of Guarantee: Specifies when the guarantee becomes effective and when it terminates

7. Guarantor's Obligations: Details the specific obligations and undertakings of the guarantor

8. Guarantor's Warranties and Representations: Lists the warranties and representations made by the guarantor regarding their capacity and authority

9. Creditor's Rights: Outlines the rights of the creditor, including enforcement rights

10. Demand and Payment: Specifies the process for making demands under the guarantee and payment requirements

11. Waiver of Defenses: Lists typical guarantor defenses that are being waived

12. Costs and Interest: Addresses liability for costs and interest charges

13. Notices and Domicilium: Specifies how and where notices must be delivered

14. General Provisions: Includes standard boilerplate clauses such as whole agreement, variation, and severability

15. Governing Law and Jurisdiction: Specifies South African law as governing law and jurisdiction for disputes