financial guarantee

A **financial guarantee** is a commitment made by a third party, typically a financial institution or guarantor, to ensure the fulfillment of a financial obligation by the primary borrower or debtor. In the event that the borrower defaults, the guarantor promises to cover the outstanding debt or payment, providing security and reducing risk for lenders or investors. This term is commonly used in banking, loans, investments, and contract agreements to enhance trust and facilitate financial transactions.