Question

Do non-recourse business loans actually exist?

There is something called a "non-recourse" loan which means the lender cannot come after you for more money if the business goes under. But every loan I've heard about requires a personal guarantee. Is "non-recourse" a myth, or just a relic from decades past?
I'm actually interested in a loan for a business operation, not the real estate underneath it.

7 years ago - 5 answers

Best Answer

Chosen by Asker

They exist, but they're difficult to get. There's an old joke that the bank will loan you money when you don't need it, but won't when you do. To qualify for a non-recourse note, you need to show the lender that they don't need your personal guaranty, they look at things like how long you've been in business, how much of the capital investment is your's or other shareholders', what your debt structure is, how profitable you are. In short, what kind of risk are you to burn them?

7 years ago

Other Answers

Yes, usually for commercial real estate. The loans are typically "overcollateralized" (80% LTV) but liability is limited to recovering the collateral.

by clawedlemew - 7 years ago

no one in their right mind would do a non-recourse loan!

by Theresa M - 7 years ago

Any business loan will require a PG. Unless of course you are a Fortune 500 type of company. Otherwise, there is no such thing as a non-recourse loan.

by nicolesdad - 7 years ago

Yes, usually for commercial real estate

by jerry - 7 years ago