The guarantee mechanism of private lending risk also depends on the relationship between relatives and acquaintances. Private financial institutions generally do not require mortgage or guarantee when lending, and mainly rely on the personal credit of borrowers or intermediaries. On the one hand, such lending activities introduced by relatives and friends are guaranteed by moral constraints, which are often more effective than legal sanctions. On the other hand, borrowing is based on personal credit, that is, what happens is personal relationship, and the borrower assumes unlimited responsibility for borrowing. When the borrowing enterprise fails to repay the loan within the time limit, private financial institutions can appeal with the loan, and the court will accept it in the form of personal loan disputes.

Private lending may also require guarantees when lending, but there are no strict restrictions on collateral. Both sides of private financial transactions can bypass the restrictions of government laws and formal financial institutions on the minimum transaction amount. Many things that cannot be guaranteed in the formal financial market can be guaranteed in the private financial market. Therefore, although private lending belongs to private economic activities, it follows the code of conduct with local traditional characteristics.