At what point do commercial real estate loans become non recourse?

Is it more of a relationship thing?
More of a dollar amount?
More of % down?

Just curious now as a bank I am talking to about a $700,000 purchase is requiring a guarantee. At what point should that not be expected? trying to learn for the future.

Thanks!

Many factors go into the requirement. Typically it is the strength of the deal, strength of the sponsor, strength of the bank, strength of the tenant(s) etc.

Shop around. There are many alternatives to banks that will offer non-recourse, although the size of the deal may limit your options.

You could ask for a "burn off" of recourse after a certain hurdle is achieved. For example, construction completion, or stabilization of NOI, or a certain timeframe.

Keep in mind that there is a trade off for non recourse loans; be it a higher rate or greater amount of equity.

The biggest determinant is whether or not the project can pay for itself, and when that happens. If a project is fully leased with long term leases that can cover the note payments after expenses with some cushion you have a better shot.

Most people who get non-recourse are experienced real estate operators. So the execution risk is low.

The most typical answer is LTV keep it at 60% or lower and you can typically get non recourse.

Another factor is if the property owner occupied or investment. For owner occupied, the operating company can provide the guaranty instead of providing a personal guaranty. Other questions - if investment - how many tenants? How are leases structured? Who are tenants?

Burn off of personal guaranty can occur. A liquidity maintenance agreement is also an option - depending on the situation. A good banker will consider all these options once you express a desire to remove the personal guaranty. The more information shard with your banker then the more help he/she can provide. The banker wants to make the loan and has to sell the loan internally to get it approved.