limited recourse loan

limited recourse loan
Finance provided by means of a loan that is secured by a charge on assets. Should the borrower default, the lender is entitled to enforce the charge but can recover only a limited amount of any shortfall directly from the borrower itself. This sort of financing is common in relation to large projects such as the building of a road, bridge, tunnel or power station and the entitlement of the bank to payments of interest and/or principal is dependent on the receipt of specified income streams and/or the continuing availability of capital assets to satisfy those payments.

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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