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 ?
With a nonrecourse loan in place, the owners were looking to give the property back to the bank.
The nonrecourse loan represented 80 percent of the total project cost.
The borrower received a nonrecourse loan with a 10 year fixed rate and a 30 year amortization.
8 November 2017 - US-based nonrecourse loan writer The Loan Companies has completed the purchase of Chicago, US pawnshop T.N.
The underlying theory, he said, would be that a nonrecourse loan is similar to an option, so a call or put option exists at the inception of the transaction.
(46) This is why a funding advance is often referred to as a nonrecourse loan. This configuration does not allow a plaintiff to roll over his debt.
Given that US sugar prices are currently near CCC loan rates and that some sugar nonrecourse loan forfeitures have already occurred in 2014, it is possible that low US sugar prices will cause relatively large nonrecourse loan forfeitures in the coming year.
Under permanent law, nonrecourse loan rates for wheat, corn and other feed grains, and cotton function as farm price supports.
More than 84% of the financing for the Nettuno solar park has been secured via an 18-year nonrecourse loan.
This example takes into account the income tax considerations if the employee loan is either a nonrecourse loan (i.e., if Executive has no personal liability for the loan) or a recourse loan (i.e., if Executive has personal liability for the loan).
(6j) An obligation will be considered recourse to a partner to the extent that the partner or a related party makes (or acquires an interest in) a nonrecourse loan to the partnership and the economic risk of loss for the liability is not borne by another partner.
Here an individual purchases a life insurance policy on his life using funds from a nonrecourse loan obtained from outside investors.