ECONOMICS GLOSSARY
Recession
Recession
A significant, broad decline in economic activity lasting more than a brief period.
What does Recession mean?
A significant, broad decline in economic activity lasting more than a brief period. Professionals may calculate, document or apply this concept differently depending on the transaction, accounting method, lender policy and governing documents. Borrowers should confirm the precise definition used in any term sheet or agreement.
Recession in context
During a recession, lenders may tighten standards as revenue risk rises.
Why it matters in financing
Recession can influence how a lender, investor or advisor evaluates risk, pricing, structure, repayment capacity or transaction economics. It should be considered together with the complete financial picture rather than used alone.
Related economics terms
Educational information only. This definition is general, may not match a particular lender or contract, and is not financial, accounting, tax or legal advice.