Commercial Lending Corporation offers both recourse and non-recourse commercial loans. There are similarities, and a few differences, between these two loan types. It is important you fully understand the details, as it helps you make informed borrowing decisions for your business. Both kinds involve providing some sort of collateral to secure the funding you require.
The main difference has to do with the types of additional assets a lender may seek in the event you default on your loan. With a recourse loan, the lender is not only limited to the actual collateral provided to obtain the loan, but also additional assets. Should the lender have to foreclose on the loan because you default, they are able to sell the property or other collateral to help satisfy the debt. However, any money still owed on the loan, after the initial collateral is sold, can be collected. The lender has the right to sue to gain control of additional assets owned by the company, as well as the wages of the business owners. Further, in some cases, courts do allow the lender to seize personal assets, such as boats and RVs, and place liens on personal property in order to fully satisfy your original obligation.
With a non-recourse loan, the lender is only entitled to seize and sell the collateral used to secure the loan. Any money still owed continues to be your financial responsibility. However, lenders are unable to initiate additional collection efforts against your other assets. It should be noted, while non-recourse loans are more desirable, they could include higher interest rates and are often reserved for those businesses with the highest credit scores. You can learn more about both of these loans in more detail, as well as others to help obtain the financing you require, by contacting Commercial Lending Corporation.
Tagged: Commercial Lending Corporation