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Alternative Security Deposit Solution for Commercial Businesses
Today we talk with Eamon Anderson, director of strategy and underwriting at TheGuarantors agency, about an alternative security deposit solution for commercial businesses that helps both the landlord and the tenant. Their solution is basically an insurance version of the commercial security deposit that protects the tenant and landlord for the term of the lease from potential loss of rent payments.
From a landlord’s perspective, it’s as good if not better than the incumbent’s solutions to cover the risk of missed rent or high upfront tenant improvement (TI) cost. They’re getting a surety bond that works just like a letter of credit and it’s backed by investment grade credit, payable on-demand. And from any of the landlord’s lender’s perspective, it works just like a letter of credit.
From a tenant’s perspective it’s a lot cheaper option because it’s unsecured. All tenants have to do is pay an annual insurance premium, typically an average of 5% of the security deposit per year, and they never have to put up the full amount of the deposit in cash. The tenant can then reinvest the money they’re not giving to the landlord.
About our Host
Eamon Anderson is director of strategy and underwriting for the Securiti team of TheGuarantors agency. He graduated from Hamilton college in Clinton New York. After college, he worked at Morgan Stanley for 5 years providing customized credit facilities to the bank’s high net worth and private equity clients. His experience with a wide array of lending products and clients types at Morgan Stanley gave him the experience to create underwrite and structure surety bonds for the Guarantors commercial clients.