Construction Finance Guarantees

Financely structures construction finance guarantee solutions that support lenders and sponsors with bank grade security, covenants and execution support.

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Construction Finance Guarantee Solutions

Construction lenders want clear security around cost overruns, delays, and completion risk before they release capital. Sponsors, developers, and contractors need structures that protect the lender without suffocating the project. That tension sits at the center of every serious construction finance negotiation.

A construction finance guarantee exists to give lenders defined recourse if the project does not perform as planned. It can sit beside mortgages, pledges, and collateral packages and it often makes the difference between a declined application and an executable term sheet. Financely supports clients on the sponsor side by structuring construction finance guarantee solutions that are commercially realistic and bankable.

Financely helps developers, sponsors, and operating companies design construction finance guarantee structures that support senior lenders, bridge providers, and private credit funds. We focus on completion support, covenant design, and documentation logic, then coordinate with regulated counterparties who issue guarantees, standby Letters of Credit, or similar instruments under their own licences.

What Is A Construction Finance Guarantee

A construction finance guarantee is a contractual undertaking that provides a lender or investor with comfort that specific obligations linked to a project will be met. It can take the form of a completion guarantee, repayment guarantee, cost overrun support undertaking, or a standby instrument that pays out if defined events occur.

Guarantee Type Primary Purpose
Completion guarantee Sponsor or related party backs completion of the project to agreed scope and date, subject to defined carve outs.
Cost overrun support Commitment to inject additional equity or subordinated capital if the budget is exceeded within agreed parameters.
Debt service support Support for interest and fees during construction until the project reaches stabilisation or a coverage test.
Construction SBLC or bond Bank or surety issued instrument that pays the lender if the sponsor fails to perform defined obligations.

The legal form can vary by jurisdiction and lender. The common thread is that the guarantee gives the financing party a clear roadmap if the project deviates from plan and that it is legally enforceable under the governing law of the finance documents.

Typical Use Cases We See

Real Estate Development

Residential, mixed use, hospitality, and logistics projects where lenders require completion support, minimum pre sales thresholds, and equity injection covenants. The guarantee framework links these conditions to practical triggers rather than open ended exposure.

  • Ground up developments with phased draw schedules.
  • Refinancing of partially completed schemes.
  • Bridge-to-stabilised facilities for income producing assets.

Infrastructure And Industrial Projects

Data centers, warehouses, small scale energy assets, and industrial facilities where construction delays or performance issues can create cash flow gaps. Guarantees can sit beside EPC contracts, offtake agreements, and long term leases.

  • Construction support for contracted revenue projects.
  • Cost overrun frameworks aligned with contingency budgets.
  • Debt service support during ramp up phases.

How Financely Structures Construction Finance Guarantee Solutions

Financely acts for the sponsor or borrower. We do not act as a guarantor. Our role is to help you present a credible, complete structure to lenders and guarantee providers so they can take decisions faster and on clearer terms.

1. Project Review And Feasibility

  • Review of project documents, budgets, timelines, and capital stack.
  • Assessment of lender expectations in the target market.
  • Identification of gaps in security, covenants, or support undertakings.

2. Guarantee Design And Term Sheet Support

  • Design of a guarantee package that aligns sponsor capacity and lender requirements.
  • Drafting of term sheet language for completion and support obligations.
  • Clear linkage between guarantee triggers and project milestones.

3. Lender And Provider Engagement

  • Distribution of the project file to banks and private credit funds active in construction finance.
  • Coordination with institutions that can issue guarantees, SBLCs, or similar instruments under their own licences.
  • Support on Q&A, credit committee requirements, and adjustments to guarantee wording.

4. Documentation And Closing Support

  • Alignment between guarantee documents and the finance agreements.
  • Checklist management for conditions precedent and corporate approvals.
  • Support through closing, drawdown scheduling, and guarantee activation conditions.

Who This Service Is For

The construction finance guarantee service is intended for post revenue developers, sponsors, and operating companies that are planning or executing meaningful projects and need institutional capital.

  • Real estate developers with projects above roughly USD 10 million in total cost.
  • Project sponsors in energy, logistics, industrial, or data infrastructure.
  • Private equity and family office investors that require a structured approach to lender negotiations.

We focus on situations where there is a clear project rationale, identifiable exit or refinance strategy, and a realistic sponsor equity commitment.

FAQ: Construction Finance Guarantee With Financely

Does Financely issue guarantees or take credit risk?

No. Financely is an advisory and arrangement firm. We do not issue guarantees, standbys, or bonds, and we do not accept client money. Any guarantee or standby instrument linked to a construction finance transaction is issued by regulated institutions under their own licences and documents.

What information do you need to review a project?

We typically require a project summary, financial model or budget, current capital stack, draft or executed key contracts, and information about the sponsor group, including track record and balance sheet support. For real estate, we also look at appraisals, feasibility reports, and pre sale or lease data where relevant.

Can you work alongside local banks and lenders?

Yes. Many of our mandates involve local banks that want to share risk, bring in additional institutions, or clarify guarantee structures before they commit. We can work with your existing lenders and investors, subject to conflict checks and agreement on roles.

How are your fees structured?

Fee structures depend on project size and complexity. In most cases there is an initial advisory retainer for structuring and preparation work, followed by a success based component linked to financial close. All fees are set out in a written engagement letter and are separate from any lender or guarantee provider charges.

Which regions do you cover?

We primarily work on cross border or internationally banked projects where lenders expect institutional level documentation and risk allocation. Transactions are assessed case by case, with attention to legal frameworks, enforceability, and capital flow rules in the relevant jurisdiction.

Request A Construction Finance Guarantee Review

If you are preparing a construction project and expect lenders to ask for completion guarantees, cost overrun support, or structured undertakings, we can review your file and give you a clear view on what is realistic before you enter detailed negotiations.

Share your project summary, budget, and target funding size. Our team will assess whether a construction finance guarantee solution is appropriate and outline a proposed structuring and engagement approach.

Request A Quote

Disclaimer: This page is for general information only and does not constitute legal, tax, investment, or financial advice. Financely is not a bank, guarantor, insurer, or broker dealer and does not issue guarantees, standby letters of credit, or bonds. Any facility or instrument discussed here is provided by regulated counterparties under their own licences, approvals, and documentation. All transactions are subject to eligibility, independent legal and tax advice, KYC and AML checks, sanctions screening, underwriting, and final approval by relevant institutions and counterparties.