Most, but not all, financing of commercial real estate is made by and through an entity (such as a corporation or limited liability company), and not an individual. Most residential transactions are the opposite – rarely if ever, will a lender lend to an entity rather than an individual. A guaranty is a promise of a third party to pay the debt or perform an obligation under the loan documents if the borrowing entity fails to do so. Since the borrower in a commercial transaction is usually an entity, and the entity can be a shell with no real assets, the lender will want to increase the likelihood of repayment and performance. A guaranty is intended to reduce the risk of default by the borrower and give the lender another source for repayment. Most lenders will require one or more of the members, partners, or shareholders of the borrowing entity to a guaranty the loan. Depending on a lender’s underwriting policies and procedures, a guaranty itself may have to be secured by additional collateral owned by the guarantor (such as a mortgage or security interest in personal property or other assets of the guarantor).