Loan-to-Cost (LTC)
Private Credit glossary · Private Credit Fundamentals
Definition
Loan amount divided by total project cost; common in construction/real-asset lending.
Loan-to-Cost (LTC) in plain English
Loan-to-Cost, or LTC, is a simple fraction that shows how much of a project's total price tag is covered by a loan versus the borrower's own money. If building an apartment complex costs $10 million and the bank lends $7 million, the LTC is 70% — meaning the developer must fund the remaining $3 million themselves. Lenders love this ratio for construction and property deals because the developer's own cash acts as a safety cushion: the more skin the borrower has in the game, the more careful they'll be and the more room the lender has if costs overrun or the finished project is worth less than hoped.
Also called: LTC
Practice Loan-to-Cost (LTC)
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