Recourse Loan
A loan that allows the lender to pursue the borrower's other assets or income if the pledged collateral doesn't fully cover the balance owed in a default.
Most small business financing, including most bank and SBA loans, is structured with recourse, often reinforced by a personal guarantee, which gives the lender more ways to recover their money and can result in more favorable rates or terms than non-recourse financing.
For the borrower, this means the risk extends beyond just losing the pledged collateral, since a shortfall after collateral is liquidated could still be pursued against other business or personal assets, depending on the guarantee in place.
Related funding options
Ready to explore your funding options?
One application, matched to funding options across our lending network.