Personal Guarantee Coverage Ratio is a key metric in property development finance UK that assesses the ability of a developer’s personal guarantee to cover outstanding debt obligations. Calculated as the value of the personal guarantee divided by the debt exposure, it reflects the financial resilience of both the developer and the project. Lenders use this ratio to evaluate risk, determining whether the developer’s personal assets provide sufficient protection if the development loan defaults. This ratio interacts closely with Loan to Value (LTV), Debt Service Coverage Ratio (DSCR), and overall capital structure, influencing lending decisions and project financing strategies.
This sits beneath Debt Service Coverage, introducing a more specific variant of the measure without changing its core interpretation.
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