non-recourse loan

A non-recourse loan is a type of loan where the lender can only recover the collateral specified in the loan agreement if the borrower defaults. This means that if the borrower fails to repay the loan, the lender cannot go after the borrower's other assets or income. Essentially, the borrower's liability is limited to the collateral, usually property or equipment. Non-recourse loans are often used in real estate or project financing, providing borrowers some financial protection, as they are not fully responsible for the debt beyond the pledged collateral.