Personal Guaranty

[GRDadof3]

It sounds simple enough, but can someone explain what it really entails? Is it that "if the project fails, you will be personally responsible to the lender for the entire amount financed"? Do you have to have the assets available at time of financing to do a personal guarantee (collateral I guess you'd call it)?

[civitas]

It sounds simple enough, but can someone explain what it really entails? Is it that "if the project fails, you will be personally responsible to the lender for the entire amount financed"? Do you have to have the assets available at time of financing to do a personal guarantee (collateral I guess you'd call it)?

[resourcefulidiot]

could a developer form an LLC (for the development as is commonly done...ie the Vinton Building in Detroit's developers formed Vinton LLC or something to that effect) or have their existing development LCC or corporation sign the personal guarentee? By what I mean is there anyway that a developer who owns a company with enough liquid assets could "bet the farm" in relation to that company...or does an individual person have to wager their personal savings/property on said development?

[terra firma]

could a developer form an LLC (for the development as is commonly done...ie the Vinton Building in Detroit's developers formed Vinton LLC or something to that effect) or have their existing development LCC or corporation sign the personal guarentee? By what I mean is there anyway that a developer who owns a company with enough liquid assets could "bet the farm" in relation to that company...or does an individual person have to wager their personal savings/property on said development?

[WOT]

If a developer is approved for an SBA loan and then the worst case scenario happens and the entity has to close, does the SBA still pursue the entity for the portion it guarantee's the bank?

[terra firma]

If a developer is approved for an SBA loan and then the worst case scenario happens and the entity has to close, does the SBA still pursue the entity for the portion it guarantee's the bank?

[/quot

SBA doesnt loan money to developers; that tool is for business finance or owner-occupied real estate to the best of my knowledge.

Replace "sba' with 'bank' in your question and the answer is YES. Unless you are doing a huge projct w/ huge equity and using non-recourse finacing from a large institutional (read; life ins. co) lender.