Glossary definition
Personal Guarantee (PG)
A legally binding commitment from an individual, usually the developer or company director, to personally repay some or all of a loan if the borrowing entity defaults. Personal guarantees are standard requirements for development finance and bridging loans, particularly where the borrower is a special purpose vehicle with limited assets.
Definition
A legally binding commitment from an individual, usually the developer or company director, to personally repay some or all of a loan if the borrowing entity defaults. Personal guarantees are standard requirements for development finance and bridging loans, particularly where the borrower is a special purpose vehicle with limited assets. Guarantees may be limited to a fixed amount or be unlimited, and they significantly increase the personal risk exposure of the guarantor.
See also
Closely related terms.
Facility Agreement
The legal contract between a borrower and a lender that sets out all terms and conditions of the loan including the facility amount, interest rate, drawdown mechanics, repayment terms, covenants, and events of default.
Senior Debt
The primary layer of debt in a development finance structure, secured by a first legal charge on the property and sitting at the bottom of the capital stack with first priority on repayment.
Further reading
Guides that touch this term.
Guide
Legal Due Diligence in Development Finance: What Solicitors Check
Legal due diligence is the backbone of every development finance transaction. This guide explains what solicitors investigate, common issues that delay completions, and how to prepare your legal pack.
9 min read readReadGuide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
Hidden Arrangement Fees in Development Finance: What Lenders Don't Tell You
Arrangement fees in development finance are rarely as straightforward as a single percentage. This guide exposes the hidden layers of fees that lenders charge and shows you how to negotiate effectively.
9 min read readRead
Where it shows up
Finance products using this term.
Service
Development Finance
Senior debt funding for ground-up residential and commercial developments.
From 6.5% p.a. · Up to 65-70% LTGDVReadService
Bridging Loans
Short-term finance for acquisitions, auction purchases and time-sensitive deals.
From 0.55% p.m. · Up to 75% LTVReadService
Mezzanine Finance
Stretch your capital stack beyond senior debt to reduce equity requirements.
From 12% p.a. · Up to 85-90% LTGDVRead
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