What Is a Recourse Loan?
The non-recourse loan is a mortgage loan. The lender provides a loan to the project hosted by the sponsor. The income generated after the project is completed and put into production is used as the source of funds for repayment of the loan. Definite warranty. In addition, the project sponsor and others do not provide any credit guarantee to the lender. However, business risks are significant. Lenders are generally reluctant to accept this approach.
Non-recourse loan
Right!
- Chinese name
- Non-recourse loan
- Nature
- A mortgage loan
- Definition
- Farmers pledged unharvested produce
- Features
- Business risk
- The non-recourse loan is a mortgage loan. The lender provides a loan to the project hosted by the sponsor. The income generated after the project is completed and put into production is used as the source of funds for repayment of the loan. Definite warranty. In addition, the project sponsor and others do not provide any credit guarantee to the lender. However, business risks are significant. Lenders are generally reluctant to accept this approach.
- The definition of non-recourse project loan is as follows:
- Take the agricultural product non-recourse project loan as an example
- That is, farmers use the unharvested agricultural products as collateral and obtain loans from the government's agricultural product credit company. The target price consists of production costs and producer profits. When the market price is higher than the target price, the farmer can sell the agricultural products at the market price and pay the principal and interest with cash. If the market price is lower than the target price, the farmer can hand over the agricultural products to the agricultural credit company, and the government will provide a differential subsidy based on the difference between the target price and the market price. The subsidy is mainly for agricultural products such as wheat, corn, cotton, and dairy products.
- Take real estate development as an example
- Construction of office buildings and bank loans is required to be completed in 2 years, and 1-3 floors will be given to banks after construction. This is a loan with limited recourse.
- The office building and bank loan can be repaid directly, you can resell it after selling it at a good price, or you can build the floor to repay it ... This is an unlimited recourse loan