Personal Guarantee
A personal guarantee is a sponsor's promise to personally repay a loan in full, or a portion of it under a partial guarantee, if the property and other collateral fall short. It's distinct from standard non-recourse 'bad-boy' carve-outs, which impose personal liability only for specific bad acts — a guarantee creates direct liability for the debt itself.
Lenders requiring a personal guarantee typically also impose ongoing net-worth and liquidity covenants on the guarantor — for example, minimum liquidity equal to some multiple of annual debt service — and can require periodic financial statements to monitor compliance through the loan term.
Full guarantees are common on construction loans, smaller-balance loans, and deals with weaker sponsors; partial guarantees, capped at a percentage of the loan, are a frequent negotiated middle ground that gives the lender comfort without exposing the sponsor's entire net worth.