At the beginning, various guarantee funds were set up by local fiscal departments and managed by guarantee institutions to share micro credit risks. But in practices, many guarantee institutions require laid-off workers to provide counter guarantee.
The purpose of guarantee fund is to disseminate micro credit risks and possible losses incurred by start-up businesses, with proper counter guarantee, a laid-off worker could borrow directly from a bank without resort to the guarantee fund. The reason they go to guarantee fund is just because of their high risk profile.