A number of private lenders and institutional lenders will agree to make construction loans on a non-recourse basis, however, certain commercial banks will require payment guaranties from sponsors obtaining construction loans, in addition to a completion guaranty and a carry guaranty.

Under a completion guaranty, the guarantor guaranties the lien free completion of the construction of the project in accordance with the loan documents, plans and specifications and project budget. Under a carry guaranty, the guarantor guaranties the payment of debt service under the loan and operating expenses for the property such as insurance premiums and property taxes.