DEFINITION of 'Recourse'

A legal agreement by which the lender has the rights to pledged collateral in the event that the borrower is unable to satisfy debt obligation. Recourse refers to the legal right to collect.


Recourse lending provides protection to lenders, as they are assured to have some sort of repayment - either cash or liquid assets. Companies that issue recourse debt have a lower cost of capital, as there is less underlying risk in lending to that firm.

  1. Cost Of Capital

    The required return necessary to make a capital budgeting project, ...
  2. Without Recourse

    This phrase has several meanings. In a general sense, when the ...
  3. Full Recourse Debt

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

    Property or other assets that a borrower offers a lender to secure ...
  5. Non-Recourse Debt

    A type of loan that is secured by collateral, which is usually ...
  6. Finance

    The science that describes the management, creation and study ...
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