A guarantor's promise to the lender that a project will be finished and its bills paid, without a promise to repay the whole loan.
A full guaranty covers repayment of the loan. A completion guaranty is narrower: the guarantor stands behind getting the building finished, which in practice means paying costs the budget does not cover. The exact duties are written in the guaranty itself. No banking rule sets them.
The OCC handbook lists it among limited guaranties: some are interest only, construction completion only, partial principal, stepped down in amount, or released during the loan term as conditions are met. The bank is expected to check that those conditions were reached before it releases a guarantor.
The handbook also tells examiners how to weigh any guarantor. They look at both the willingness and the ability to support the loan and at whether the guaranty is legally enforceable. The bank should verify the guarantor’s liquidity. A guarantor’s unpledged assets are not treated as a substitute for equity in the project.
Expect to supply a personal financial statement and a schedule of other guaranties you have signed.
How it shows up in the data here
Guaranties are private loan documents, and no public file shows which loans carry one. Bank call reports show construction and land balances held, not the guaranty terms behind them. Start with lenders that hold construction loans at construction lenders. Whether a bank will take a completion guaranty in place of a full repayment guaranty is a question for its lender; it is not in the data here.
Go further
- Construction lenders by state: Lenders with construction balances, state by state.
- Deal summary builder: Turn the facts of a deal into a clean one-page summary you can copy or print. Nothing is saved or sent.
- Guarantor strength and recourse, explained: A guaranty is the lender's second way out. Whether you sign one, how much it covers and what the lender checks before accepting it shape a commercial loan as much as the rate does.
- Construction loan package checklist: A construction lender is lending against a building that does not exist yet. The package has to show what it will cost, who will build it, where every dollar comes from, and how the loan gets repaid when it is done.
Related terms
- Guarantor: A person or company that promises to repay a loan if the borrower does not. On a loan to an LLC or corporation, the guarantor is usually an owner.
- Personal guaranty: A signed promise by an individual, usually an owner, to repay a business or real estate loan personally if the borrowing company does not.
- Recourse: A lender's right to collect a loan from the borrower or guarantor personally, beyond the property or other collateral pledged for it.
- Non-recourse loan: A loan the lender can collect only from the property pledged for it, not from the guarantor personally, except for listed bad acts.
- Carve-out guaranty: A guaranty on a non-recourse loan that makes the guarantor personally liable only if the borrower commits listed acts, such as fraud or a voluntary bankruptcy.
- Cost overrun: The amount by which a construction project costs more than its budget, which the borrower is normally expected to cover.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.