From a commercial lending perspective a “no guarantor” loan is typically considered “non-recourse.” This would mean the borrower, otherwise referred to as an obligor, is the only legal entity or person that is legally obligated or tied to the loan.

For a commercial bank to approve a non-course loan would require appropriate mitigates to offset the associated risk. For example, providing liquid collateral (ie. cash) would be done on a dollar-to-dollar basis. If a commercial borrower had a strong tangible net worth, solid balance sheet & minimal debt obligations then that would potentially provide an example of appropriate mitigates. Another example would be a commercial real estate property (ie. office building) that is stabilized with a credit tenant signed to a multi-year lease.

The reality is most commercial lenders will require anyone with 20% or more ownership in an entity to provide their personal guarantee. Outside of the collateral, the personal guarantees provide the lender re-course to legally pursue payment and/or collection of the debt should the loan go into default.