# Non-Recourse Financing

Canonical URL: https://fundmyequipment.com/learn/glossary/non-recourse-financing/
Last modified: 2026-05-29T19:39:17+00:00
Type: efin_glossary

## Summary

Lender's remedy on default is limited to the equipment. Rare in equipment finance.

## Content

Non-recourse financing is a loan or lease where the lender's only remedy after default is to repossess and sell the equipment. The lender cannot pursue the borrower's other business assets or the personal assets of any guarantor for a deficiency.
When non-recourse exists in equipment financing
Rare on small-ticket equipment (under $250K). More common on:

Large-ticket transportation equipment (aircraft, marine vessels) where the asset is the primary collateral and resale markets are strong
Project-finance structures where the project itself is the collateral
SBA loans (which have specific recourse limitations)
Certain real-estate-backed equipment deals

Why non-recourse costs more
The lender bears all downside risk. They price it in: higher rates, larger down payments, stricter underwriting on credit, revenue, and the asset's historical resale value.
Non-recourse vs no-PG financing
Often confused but different. No-PG financing means the business owner does not personally guarantee the loan, but the business itself is still on the hook. Non-recourse means neither the business nor any guarantor can be pursued beyond the collateral.
Watch the contract language
"Non-recourse" sometimes has carve-outs ("bad-boy guaranty" provisions) that make the borrower personally liable for specific bad acts (fraud, environmental violations, voluntary bankruptcy). Read the carve-outs carefully.