Non-Recourse Finance

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DEFINITION of 'Non-Recourse Finance'

A loan where the lending bank is only entitled to repayment from the profits of the project the loan is funding, not from other assets of the borrower.

BREAKING DOWN 'Non-Recourse Finance'

These types of projects are characterized by high capital expenditures, long loan periods, and uncertain revenue streams. Analyzing them requires a sound knowledge of the underlying technical domain as well as financial modeling skills.

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RELATED FAQS
  1. What role do SPVs / SPEs play in public-private partnerships?

    When created and used in conjunction with a public-private partnership (PPP), a special purpose vehicle (SPV) -- sometimes ... Read Full Answer >>
  2. What is the difference between a non-recourse loan and a recourse loan?

    The essential difference between a recourse and non-recourse loan has to do with which assets a lender can go after if a ... Read Full Answer >>
  3. Can I take my 401(k) to buy a house?

    Once you reach 59.5, you can use the funds in your 401(k) retirement savings account to buy a house or any other expense ... Read Full Answer >>
  4. Can I use my 401(k) as a collateral for a loan?

    Although federal Internal Revenue Service, or IRS, regulations prohibit using a 401(k) account as collateral for a loan, ... Read Full Answer >>
  5. Why do commercial banks borrow from the Federal Reserve?

    Commercial banks borrow from the Federal Reserve primarily to meet reserve requirements when their cash on hand is low before ... Read Full Answer >>
  6. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>

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