Since a non recourse loan offers a range of advantages to borrowers, this kind of loan is often considered to be an excellent financing program in building healthcare facilities. Developers who plan on putting up assisted living facilities can apply for this kind of loan. Here are a few things which you need to know about assisted living non recourse loans before applying for one.

Non recourse financing has less liability

Compared to a recourse loan, non-recourse loans place no liability on the part of the borrower. In a recourse loan, collateral is not the only requirement. You are held personally liable for the loan. In case of default, the lenders have the right to seize your property or any other asset you may have under your name, to recoup the money you owe them. Non recourse lending however is entirely different. In the event of a default, the lenders can only go after the collateral you have pledged on the loan. Whether the property has increased or decreased in value, the only resort available to the lenders is to foreclose on the collateral property and not on any of your personal assets.

Non recourse loans require collateral

In a non recourse loan, collateral is a huge factor. The value of the financing cannot exceed 90% of the appraised value of the collateral. Developers who plan on putting up an assisted living business, for example, may declare the business property or the building as collateral on the mortgage, provided that the property appraises in accordance with the loan requirements.

In the case of most recourse loans, approval is possible without collateral. The fact that recourse loans are easier to apply to makes them a popular choice for many borrowers. One clear disadvantage to these types of loans, in contrast to non recourse loans, is the ability of the lenders to hold you personally liable on your debt. If you default on your loan or your mortgage, your lender has the option to attach your personal assets or your business as a means to fully pay the outstanding debt.

Better non recourse loan rates

You can also take advantage of better rates from non recourse lenders. Although a recourse loan may offer a lower interest rate, some non-recourse lenders do offer attractive rates to those who have excellent credit history. Shopping around first for the best non recourse loan deals will help you take advantage of lower APRs or Annual Percentage Rates.

The fact that a non recourse loan requires collateral makes them highly suitable for mortgages. In an assisted living non recourse loan therefore, the business property can serve as collateral for your business. There is no need for you to secure another property as collateral for the loan. Assuming that you pass all other requirements for the financing program, a non-recourse loan can help you finance your project with lower personal risk.