nonrecourse loan

Nonrecourse loan

A loan for which no partner or related person bears the economic risk of loss. For example, if a partnership fails to repay a nonrecourse loan, the lender has no recourse against any partner except to foreclose of the assets used to secure the loan.

Non-Recourse Finance

A loan secured by the revenue of the project the loan intends to fund, and nothing else. That is, non-recourse finance does not allow the bank or other lending institution access to the borrower's other assets in the event of default. This is a relatively high-risk form of financing; projects that utilize non-recourse finance generally have uncertain revenue streams and long loan periods.

nonrecourse loan

A loan in which the lender cannot claim more than the collateral as repayment in the event that payments on the loan are stopped. Thus, a group of investors may purchase an asset with a down payment and the proceeds from a nonrecourse loan. In the event that the investment turns sour, the investors are not apt to lose more than the down payment and payments already made on the loan. The unpaid balance on the loan will be absorbed by the lender. Compare recourse loan.

nonrecourse loan

A loan that includes no personal liability for the borrower. The lender has agreed that the collateral is sufficient and,if there is a foreclosure and the property brings less than the amount due under the loan,then the lender will suffer the loss and not sue the borrower.Even nonrecourse loans typically have carve-outs imposing personal liability on the borrower if there are environmental problems or the borrower is guilty of some sort of fraud.

References in periodicals archive ?
He required a highly leveraged, nonrecourse loan and we closed the transaction in 30 days.
Under permanent law, nonrecourse loan rates for wheat, corn and other feed grains, and cotton function as farm price supports.
2 million nonrecourse loan from Bear Stearns Commercial Mortgage Inc.
The regulations provide that relief of a nonrecourse loan will be sufficient consideration received for property that is in default.
It looks at standard terms of a SOLI proposal; explains why a trust usually should own the SOLI policy; explains why the insured should know the identity of the investors; considers insurance fraud and/ or commission rebating issues; considers the potential liability of the insured to the investors; discusses the tax treatment of i) the up-front cash payment, ii) the interest paid on the nonrecourse loan, and iii) the transfer of the SOLI policy in satisfaction of the nonrecourse loan; looks at federal estate tax issues; and makes some recommendations.
5 million nonrecourse loan with 75 percent loan-to-value (LTV) and three years interest-only priced under 6 percent.
The plan can be structured with a nonrecourse loan delivered with no personal guarantee," adds Rothstein.
This reluctance stems from the fact that the lessor actually finances the purchase price of the equipment through a nonrecourse loan from (or discounted rental-stream assignment to) a bank or other funding source, which will then take a security interest in the lease, the lease rentals and the equipment.
The partnership uses the $20,000 capital contributed and a $100,000 nonrecourse loan to purchase equipment worth $120,000.
LaunchCapital SB is offering a fair market interest rate, nonrecourse loan to community-based small businesses that are in the earliest stages of development.
The borrower declined to describe specifics of the debt but said it was a nonrecourse loan, meaning the lender can't go after their other assets in the event of a default.
MMCC secured an 80 percent LTV, nonrecourse loan for the property through one of our correspondent agency lenders, adds Adams.