Completion guarantee

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-06

// THE SHORT ANSWER

A completion guarantee is a promise, usually from a developer's owners or parent company, that a project will be built to practical completion, often by a set date, with the guarantor funding whatever that takes. A cost overrun guarantee pays only the costs above budget; a completion guarantee can also oblige the guarantor to carry interest through a delay or to step in and finish the work, and it is less often capped. The two names are used loosely, so a lender reads the operative clause, and values the guarantee at what the guarantor could pay in the conditions that would make the lender call on it.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.