Non-recourse financing

Non-recourse financing is a lending arrangement in which the lender cannot access the borrower's assets in order to obtain payment, other than any designated collateral. Instead, the lender must rely on the cash flows of the borrower to be paid. Since the potential sources of repayment funds are reduced, this type of financing presents a relatively high risk of loss for lenders. Consequently, non-recourse financing is generally only available to larger entities with strong operating cash flows. Given the higher risk of nonpayment, the interest rates associated with this type of financing tend to be high.

Related Courses

Corporate Finance 
Treasurer's Guidebook