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Completion Guaranty Exposure Calculator
Construction loans typically require a sponsor completion guaranty. This calculator sizes max exposure and compares to sponsor net worth.
Scenario 2 guaranty exposure
$3,000,000
Scenario 1 guaranty exposure
$1,000,000
Contingency amount
$1,000,000
% of net worth at risk (S2)
20.00%
How the math works
Completion guaranty = overrun − contingency. Sponsor liable for the gap from personal funds.
Sponsor net worth vs max exposure is the real test. If 20% overrun exposure > 50% of net worth, sponsor shouldn't sign. Negotiate a cap or walk.
How to Use
- Enter approved loan budget.
- Enter hard cost contingency %.
- Enter expected cost overrun scenarios.
- Read sponsor liability at each scenario.
Frequently Asked Questions
What is completion guaranty?
Sponsor (individual or parent entity) personally guarantees project completion within budget. If overrun exceeds contingency, sponsor funds the difference from personal funds. Non-recourse to project equity.
Can it be capped?
Negotiable — cap at 20-50% of loan is typical. Some lenders insist on unlimited (especially for non-recourse deals). High-net-worth sponsors have leverage; weak balance sheets don't.
Worst case?
Major cost overrun (40%+) on a large project can exceed sponsor net worth. Personal bankruptcy is possible. Always review guaranty language with attorney before signing.
When does a lender negotiate vs foreclose?
Lenders calculate their net recovery from foreclosure (asset value minus legal, time, and sale costs) and compare to any workout proposal. If your offer nets the lender more than foreclosure, and you present it with clear sources of capital, most lenders will engage. Bring a credible sponsor, documented sources, and a timeline — vague asks get declined. Build the relationship before distress, not after.
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