Recourse Loan

In a recourse loan, the borrower is fully responsible for repayment. If the borrower defaults and the collateral does not cover the loan amount, the lender can claim other personal or business assets. This contrasts with non-recourse loans, where recovery is limited to the collateral. Startups may encounter recourse loans when founders personally guarantee debt. While these loans may offer better terms, they carry higher personal financial risk for founders.