Non-Recourse Commercial Loans

A non-recourse commercial loan is one in which personal guarantees from the owners of the project are not required. The project itself must be strong enough to support such a request. Typically, lenders are looking for a stable income stream from the property as well as a good collateral position in the asset. I typically see these types of loans on income producing real estate projects that are stabilized for 1 or more years. Lenders will classify a property that is performing at 80% or better of it’s capacity for revenue to be considered stabilized.

Although these loans are non-recourse; lenders will often still ask for a personal financial statement from the borrowers as well as some tax information to see who stands behind the project. So long as the ownership seems reasonable for the project and the size of the loan, lenders generally can get comfortable with a non-recourse loan and will waive the personal guarantees.

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