AI agents for business finance: what they can and can't do
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The short answer
A guarantor must pay what the guarantee they signed says, usually the borrower's unpaid balance up to any cap in the guarantee, plus interest and costs if the form includes them. Many Nigerian guarantee forms make the guarantor jointly and severally liable, so the lender can demand payment from the guarantor as soon as the borrower defaults. A guarantor who pays can recover that amount from the borrower.
Signing as a guarantor often happens quickly, at a branch or on a cooperative form, as a favour. The demand letter arrives months later. What you owe depends almost entirely on the document you signed, so the first step is to get a copy.
What you are liable for
A guarantee is a promise to answer for someone else's debt. The amount is set by its wording. Our explainer on what a guarantor signs up for covers the form in detail; for a default, these are the clauses that decide your exposure:
- Cap or limit
- Whether liability is limited to a stated sum or covers "all monies" owed
- Interest and costs
- Whether default interest, fees and recovery or legal costs are included
- Joint and several
- Whether the lender can come to you without first pursuing the borrower
- Continuing guarantee
- Whether it covers only this loan or later facilities too
- Set-off or debit
- Whether the lender may take money from your own accounts with it
- Notice
- How and where the lender must send a demand
When the lender can demand payment
Under a joint and several guarantee, the lender can usually demand payment from you as soon as the borrower is in default as defined in the loan agreement, often after a written demand to the borrower has gone unmet. It does not have to sue the borrower first. Where the guarantee says the lender must first exhaust remedies against the borrower, it must do so before turning to you. Read the demand clause to see which applies.
Worked example (illustrative figures)
| Item | Amount |
|---|---|
| Borrower's unpaid balance | ₦650,000 |
| Default interest and charges added | ₦50,000 |
| Total owed by the borrower | ₦700,000 |
| Guarantee cap in your form | ₦500,000 |
| Maximum demand on you, if costs are inside the cap | ₦500,000 |
| Balance the lender must recover from the borrower | ₦200,000 |
If your form says costs are payable on top of the cap, the demand could be higher. If your guarantee is "all monies" with no cap, the lender could demand the full ₦700,000.
Your defences and protections
- Changed terms. If the lender increased the loan or materially changed its terms without your consent, take advice; guarantees are often read strictly in a guarantor's favour where the risk was changed without consent, though many forms say you agree in advance to changes.
- Wrong amount. Ask for a full statement of the borrower's account and check the arithmetic and any charges.
- No valid guarantee. If you did not sign, or signed a different document, say so in writing at once.
- Digital lenders. The FCCPC's 2025 regulations bar unfair terms contrary to section 127 of the FCCPA (Regulation 18(b)) and require fair recovery practices, which covers how a guarantor is treated.
Talk before you pay
Before paying anything, speak to the borrower. Many defaults are temporary, and a borrower with a clear plan, such as the one in how to get out of debt, is more likely to recover. A borrower who knows the lender has turned to you may find the money or agree to pay you back in instalments. Put any such arrangement in writing, signed by both of you. You can also ask the lender whether it will accept a plan in which the borrower pays part and you pay part, which may keep the account out of court. If you pay, pay the lender directly through its official channels, never through the borrower, so there is a clear record that the money reached the lender as a guarantor payment.
If the borrower has died or disappeared, tell the lender in writing and ask what it has done to recover from the borrower's estate or security before it turns to you, where your guarantee requires that.
Getting your money back from the borrower
A guarantor who pays the lender has a right to be repaid by the borrower. In practice:
- Pay only after confirming the amount in writing, and get a receipt stating you paid as guarantor for the named loan.
- Ask the lender for a letter confirming the amount you paid and, if the debt is cleared, a clearance letter.
- Ask the lender to transfer to you any security it holds for the paid amount, if the documents allow.
- Write to the borrower demanding repayment, with copies of the receipts.
- If the borrower does not pay, you can sue for the amount; see suing a friend who owes you money.
What to check first
- A copy of the guarantee you signed, not just the loan offer.
- The demand letter: the amount, the date and how long you have.
- The borrower's account statement.
- Whether your own accounts with the lender are at risk of set-off or a GSI debit.
Where Pryme fits
Loans on Spaces, lent by Solid Allianze Microfinance Bank, show the full agreement to the borrower before acceptance. Details are on the credit page.
Questions people ask
Will a guarantor pay the whole loan in Nigeria?
Only up to what the guarantee says. A capped guarantee limits you to the cap; an "all monies" guarantee can cover the full balance with interest and costs.
Can the bank come to me before suing the borrower?
Usually yes, if the guarantee makes you jointly and severally liable. Check the demand clause.
Can a guarantor recover money from the borrower?
Yes. A guarantor who pays can claim that amount from the borrower, and can sue if they refuse.
Can a loan app call my guarantor?
Only if you named a guarantor in the agreement. Messaging other contacts who did not agree is a separate matter you can report.
Sources
- FCCPC: Digital, Electronic, Online, or Non-Traditional Consumer Lending Regulations, 2025 (made 21 July 2025) · accessed Oct 2026
- FCCPC: FCCPC Resumes Digital Lending Regulation (20 July 2026) · accessed Oct 2026
- CBN: Financial institutions under CBN supervision · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.