Financial guarantee co-operatives
Financial guarantee co-operatives, such as the consorzi fidi in Italy, which have been developed to support the financing of co-operatives and other small and medium firms. The members of the consortium elect a committee – usually the most respected entrepreneurs from a range of sectors. These members then study proposals relating to their particular sector (clothing, furniture, engineering, food etc) and they give their judgement on the quality of the proposal and the prospects of the enterprise. If the judgement is positive, the committee then promises to guarantee a bank loan to the enterprise, backed by a small capital reserve and the personal guarantees of each member of the consortium. This system is very successful, with failure rates of less than 0.5 per cent as against seven per cent for the mainstream financial sector.