State guarantees are usually associated with a loan or other financial obligation contracted by a borrower with a lender. Under certain circumstances they may be considered as state aid. If aid is involved, the beneficiary is in most cases the borrower because he can raise funds at a lower cost than would be possible without the guarantee. The European Commission recently adopted a notice on the application of Articles 87 and 88 of the EC Treaty to state aid in the form of guarantees. The notice gives a definition of state guarantees and explains how the element of a guarantee should be calculated. The notice also provides a list of circumstances in which the Commission assumes that no aid element is contained in a guarantee. The notice does not however contains any provisions on the question of compatibility as it makes the general rules on state aid applicable to state guarantees. Furthermore, the notice explains the consequences of failure to notify state aid in the form of guarantees. The present article critically examines the content of the notice in the light of the previous practice of Commission and of the principles of Community state aid law as elaborated by the case law of the European Courts.