The main advantage of a recourse loan is that lenders will often view the personal guarantee as their confidence in repaying the loan amount, and are more willing to provide better terms on the note. This can be beneficial to savvy borrowers since they can get better terms on the loan.
Another advantage of a recourse loan is that it can enable an investor to borrow more than they would be able to with a non-recourse loan. This is because the debt isn’t tied to the borrower’s income or total assets — as they are with a recourse loan.
Finally, recourse loans can be significantly less complicated for a syndication or partnership. Consider the challenges of non-recourse financing in such a situation: Let’s say three investors pool their resources to finance the acquisition of a shopping center. With a recourse loan, all three investors can be held liable for the loan, which can make it easier to secure financing.