What is “non-recourse” financing?

In a typical secured commercial loan, the borrower is both personally liable for the debt and provides real or personal property as collateral for the loan. In a non-recourse financing, the borrower has no personal liability and the lender can look only to the collateral to satisfy the debt if the borrower defaults. Because non-recourse financing provides the lender with fewer alternatives to collect a debt if the borrower defaults, it is rarely seen in commercial borrowings by small and mid-sized businesses.