Non-Recourse Debt

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DEFINITION of 'Non-Recourse Debt'

A type of loan that is secured by collateral, which is usually property. If the borrower defaults, the issuer can seize the collateral, but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount. This is one instance where the borrower does not have personal liability for the loan.

INVESTOPEDIA EXPLAINS 'Non-Recourse Debt'

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.

RELATED TERMS
  1. Recourse

    A legal agreement by which the lender has the rights to pledged ...
  2. Non-Notification Loan

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  3. Non-Recourse Expense

    An accounting term that sometimes refers to the cost of absorbing ...
  4. Full Recourse Debt

    A guarantee that no matter what happens, the borrower will repay ...
  5. Collateral

    Property or other assets that a borrower offers a lender to secure ...
  6. Default

    1. The failure to promptly pay interest or principal when due. ...
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