How to compensate personal guarantor in a syndication transaction

[Connie Dai]

Would like to learn how a personal guarantor is compensated for taking the risk. Sponsor just purchased a land to build an apartment. Sponsor is in the process of set up an LLC with multiple members put in equity money and LLC to borrow a loan. Lender of course requires a personal guarantor. One shareholder of Sponsor and who also takes about 30% membership interest in LLC will be the personal guarantor. Does he usually receive compensation for his taking this risk to be the personal guarantor - such as, he gets more equity interest than the percentage of his investment, or a percentage of distribution being carved out to this person?

[Dan Rowley]

@William Yeh   
Under non-recourse loans, the guarantor is not generally responsible for losses the lender incurs, unless they commit certain bad acts; such as fraud, waste, damage or destruction, misapplication, misrepresentation, bankruptcy, or environmental contamination.  So there is still someone that needs to sign their name and would be responsible in the even to of 'bad actor' behaviors.