Do non-recourse business loans actually exist?

Question

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.

Answer 1

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?

Answer 2

Non Recourse Business Loans

Answer 3

I've never heard of non-recourse. I think you are asking whether or not your loan would be considered Cash-out or Rate-and-term. If your second was used to buy the house, you can roll both loans into one as a Rate-and-term mortgage. You will be allowed to roll in the closing costs and get up to $1,999 cash back. There is a section on page one of the 1003 (application) that asks "purpose of refinance". It will be stated there.

Answer 4

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.

Answer 5

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

Answer 6

Yes, usually for commercial real estate

Answer 7

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