Why might an owner choose a recourse loan over a non-recourse loan?

An owner might choose a recourse loan over a non-recourse loan primarily due to the potential for lower interest rates associated with recourse loans. When a loan includes a recourse provision, the lender has the right to pursue the borrower’s other assets beyond the collateral in the event of default. This added security for the lender often results in more favorable loan terms, including lower interest rates, because the lender is taking on less risk compared to a non-recourse loan where their recovery is limited strictly to the collateral.

In the context of financing, lenders are generally more willing to offer competitive rates for recourse loans, as they have additional legal means to recover any losses. Thus, borrowers might opt for these loans to take advantage of the lower cost of borrowing, making it a financially strategic choice.