Personal guarantees from limited partners

[Bennet Sebastian]

So I just got turned down for a construction loan from a local community bank for a spec medical office project that I am planning to build. I have the site under contract and all of the numbers work. I have a several limited partners who will be contributing equity into the deal ranging from 10% to 50% of the total equity with me contributing 25%. The reason I got turned down is because the bank wants any equity partner contributing 20% or more of the total equity to personally guarantee the loan which I already know they won’t do. I’m willing to guarantee but my personal financials apparently aren’t strong enough to be the sole guarantor.

The anticipated construction period will be 1 year and then I expect to lease up and exit within a year after that. So the total loan period would be around 2 years.

Any recommendations on where else I could turn for financing (besides hard money). ?

[Taylor L.]

Why not bring in additional LPs to reduce each LP's ownership percentage? It's pretty common for lenders to have that requirement of >20% equity owners. It's very common to give an investor additional equity for their signing on the loan. Would they sign in exchange for additional equity?

As it is, those investors have 10-50% of nothing unless they're open to a different type of capital stack!