Banking Brief: Financial Services Insights

In commercial lending, the decision to designate a party as a guarantor or co-borrower is more than a technicality—it can significantly impact a lender’s ability to enforce a loan. Mislabeling a guarantor as a co-borrower, particularly when they do not receive loan proceeds, often weakens a lender’s position in the event of default. This is a common point of confusion in loan structuring, and it may even seem counterintuitive, but missteps in this area can lead to costly challenges.