Non Recourse Loans are a type of loan in which the borrowing`entity is not at risk for the borrowed funds. The lender is expecting repayment of the salvage value of the leased asset, so, the lenders credit decision will be based on the creditworthiness of the lessee as well as the expected salvage value of the leased asset.

Within the articlaes of the draft of a non recourse loan, it is important to look for, and pay special attention to what a clause called the 'carve-out' liabilities. This clause defines what portions of any liabilities pertaining to the ownership/control of the property, the borrower is responsible to pay.

 

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