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Non recourse commercial loans provide property owners with financing where the borrower is not personally liable, protecting personal assets while securing capital for income-producing real estate.
The defining feature of non recourse commercial loans is that, beyond using the property as collateral, the borrower is not required to sign a personal guarantee. In contrast, a “with recourse” loan does include a personal guarantee. In both cases, the real estate collateral is key—if a default occurs, the lender’s primary recourse is to seize the property. The distinction becomes especially important when the lender sells the property to recover the loan principal, unpaid interest, and expenses. If you’re asking, “What is a non recourse commercial loan?”—you’ve come to the right place.
A non recourse commercial loan means that if the borrower defaults—failing to repay the principal, accrued interest, or associated fees—the lender cannot pursue the borrower personally to collect the debt.
In a non recourse commercial loan, an asset such as a property is used as collateral in exchange for financing. The lender’s only claim in case of default is to repossess the collateralized property, not the borrower’s personal assets.
Some non recourse commercial loans, including multifamily loans, commercial mortgages, construction loans, and other financing types, are fully non recourse. This means that missed payments or defaults are repaid solely by liquidating the collateral property. Other non recourse commercial loans are partially recourse, allowing lenders to pursue the borrower personally under certain conditions, such as missed payments outside the collateral agreement.
There are also types of non recourse commercial loans where borrowers can access funds without a credit check or established credit history. In these cases, the borrower’s sole obligation is to repay the loan amount with interest and fees as specified in the promissory note.
Non recourse loans are one of the most common types of loans used in commercial real estate investments. An example of a non recourse loan is a mortgage for a house that has been taken as collateral from the borrower. The lender can have no claim to any of the borrower’s personal assets, but only take possession of the mortgaged property. A non-recourse loan allow lenders to take possession of a property if a borrower misses a payment or defaults on the agreement.
Non-recourse loans can also be helpful for the following scenarios/individuals:
When you use a non-recourse commercial property loan, the lender cannot take any of your personal assets. But they can take possession of the property you used as collateral if you miss a payment or default on your agreement.
Commercial real estate loans tend to be non-recourse, meaning the lender can only take possession of the commercial property and they cannot pursue any other assets. This type of loan has been popular for years with investors who purchase commercial property from a seller that demands a large down payment from the buyer.
Non recourse financing is used across many types of personal finance situations, including mortgages and car loans , but it’s especially important in terms of commercial real estate investment. In 1997, research by Wharton University found that 80% of recourses loans were recourse on the borrower’s primary residence while 60% of all non-recourse loans were used on income producing properties.
One of the most common requests we receive is to help explain the difference between a recourse vs nonrecourse loan. Recourse loans mean that the lender can take other things that belong to you if you cannot repay the loan, like your home or car. Non-recourse means that the lender cannot take anything else because it is not related to the loan.
A recourse loan is a type of a commercial loan where a lender has a claim on assets that are not tied to the property being mortgaged. These assets can be personal, business or real estate assets. This means that if you cannot repay the loan for any reason, the lender may seize these other assets so recoup some of their losses from your defaulting on the commercial loans .
That’s not the only difference between a recourse vs nonrecourse loan. In addition, lenders have to abide by state laws when it comes to foreclosure proceedings and other items pertaining to non-recourse loans or recourse loans. In most states, foreclosure proceedings must comply with state statues including statutes addressing deficiency judgments. A deficiency judgment occurs when you owe more than your property sells for in foreclosure sale.
Qualified non-recourse financing is a type of financing that is only required to be repaid from the collateral of a loan rather than a borrower’s personal assets. This type of financing is typically used for commercial property investments so if the borrower defaults on their agreement, the lender can only take possession of the property.
In some cases, lenders will have recourse on primary residence, so they can pursue other assets if the borrower misses a payment on a mortgage for example. In most cases, however, qualified non-recourse loans are common in commercial real estate finance and it is usually legal in most states for them to do this.
A non-recourse loan is a type of commercial loan where the lender can only take possession of the property being mortgaged. If the borrower does not repay the loan, the lender cannot take anything else.
Now you have a non recourse loan definition, but how do they work?
A non-recourse commercial real estate loan does not provide the lender with any recourse on personal assets. The lender can take possession of the property and other assets if the borrower misses a payment or defaults on their agreement. Non-recourse loans are typically used for commercial property investments and it is often legal in most states.
Non-recourse commercial real estate loans can sometimes be risky for lenders because the lender cannot pursue any other assets if you miss a payment or default on your agreement. In addition, lenders have to abide by state laws concerning foreclosures and other items pertaining to recourse and non recouse loans. It’s important that you check with your state to see what is legal and recommended when it comes to this type of financing.
What is a recourse loan? A recourse loan is a type of commercial loan where the lender has a claim on other assets in case you default on your agreement . You could forfeit personal, business or real estate assets if you cannot repay the loan for any reason.
A non-recourse loan rate is the interest rate you get on a commercial property if you are using qualified non-recourse financing. This type of financing is generally for investing in commercial property because it gives the lender no recourse on other assets. Non-recourse loans are risky for the lender because they can only take possession of the property if you miss a payment or default on your agreement. As such, non recourse loan interest rates can sometimes be higher.
Using a mortgage broker is an excellent way to find non recourse commercial lenders from one unified location. We’ll provide you with access to the top commercial lenders for both recourse and non recourse financing for any commercial project.
A qualified non-recourse financing is a loan that a lender can take a deficiency action if a borrower defaults. Consequently, the lender will only be able to take execution for any security that was provided to them. The following are some qualities of a qualified non-recourse financing:
The following are some qualities that disqualify a non-recourse financing:
Want to qualify for non-recourse financing and the highest quality non recourse commercial loans? You’ll need to meet certain needs, including creditworthiness. Our broker team can help you determine exactly the qualifications you’ll need to meet.
The best place to obtain a non-recourse loan is through a qualified broker such as Clopton Capital, who can help link you up with the best possible lenders.
Wondering how to secure a non-recourse loan? You’ve come to the right place. We’ll work with you based on your specific needs to find the right loan and terms.
Clopton is a national commercial mortgage broker specializing in non recourse commercial loans that gives our clients looking to borrow from $1 million – $40 million on-demand access to the most competitive commercial non-recourse lenders in the business. We offer customized loan solutions for all types of commercial real estate transaction types where personal guarantees do not enter the conversation.
When you apply through us we will do our due diligence before deciding to underwrite but once decided we’ll set you off on the non-recourse loan track straight away. It will make a huge difference to your peace of mind over the long run. What better formula is there than the best rates in the business, no compromise on standard redemption terms, fast approval, and zero worrying about your personal liability?
To understand more about non-recourse loan options, contact one of our commercial mortgage lenders by calling 866-647-1650 or using the Contact Us form available from the menu. We’re always happy to work with investors to find the right non-recourse commercial loan rates and repayment plans to suit your needs. And with low closing costs attached to a straightforward documentation and underwriting process, your commercial non-recourse loan process will be stress-free.
A lender is owed $2 million at the time of a property foreclosure.
After retrieving the property, the lender sells it for only $1.5 million incurring a $500k deficit on the advance to the borrower.
In a recourse loan: the lender can look to the “with recourse” borrower to make up the difference based on its/his/her personal guarantee.
In a non-recourse commercial loan, as is the case with all non recourse commercial loans: the non-recourse lender would have no such remedy.
Exception: Even with a non-recourse loan there may be instances where a personal guarantee could be triggered – commonly referred to as recourse carve-outs or bad-boy carve-outs. These are typically instances where fraud, theft, misrepresentation, etc. have played a role in the lender’s misfortune with the real estate.
To understand more about non-recourse loan options, contact one of our commercial mortgage lenders by calling 866-647-1650 or using the Contact Us form available from the menu. We’re always happy to work with investors to find the right non-recourse commercial loan rates and repayment plans to suit your needs. And with low closing costs attached to a straightforward documentation and underwriting process, your commercial non-recourse loan process will be stress-free.
Finance your commercial property without personal liability — Get a Non-Recourse Commercial Loan With Clopton. Call 866-647-1650 today.
A non-recourse commercial loan is a type of financing where the lender can only seek repayment from the property securing the loan, not from the borrower’s personal assets. This protects the borrower’s personal finances while funding income-producing properties.
Non-recourse loans are typically available for:
Lenders generally require strong property cash flow and a solid loan-to-value (LTV) ratio.
Non-recourse loans protect borrowers from lenders pursuing their personal assets in the event that they’re not able to pay off their loan.
Loan-to-Value (LTV): Typically 65–80% depending on property type
Term: Usually 5–10 years
Interest: Fixed or floating (often SOFR-based)
Amortization: Partial amortization or interest-only, with balloon payment at maturity
Prepayment may be restricted with yield maintenance or defeasance clauses.
Chicago based Clopton Capital is a national commercial mortgage broker dedicated to matching borrowers interested in multifamily, industrial, commercial, & mixed-use real estate to lenders aligned exactly with their needs for asset-backed funding.
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