When is a Full Recourse Loan Acceptable?

The answer to that question is, complicated. Let’s start with a simple definition and talk through some of the scenarios that make sense.

A recourse loan is a loan where the borrower is personally liable for repaying the outstanding balance of the loan, above and beyond the underlying collateral. For example, in a worst-case scenario where the underlying asset must be liquidated, the borrower is still on the hook for the unpaid balance after the liquidation.

In a non-recourse loan, the borrower is not […]