What is the 'Loan Life Coverage Ratio - LLCR'
The loan life coverage ratio (LLCR) is a financial ratio used to estimate the ability of the borrowing company to repay an outstanding loan. The Loan Life Coverage Ratio (LLCR) is calculated by dividing the net present value (NPV) of the money available for debt repayment by the amount of senior debt owed by the company.
BREAKING DOWN 'Loan Life Coverage Ratio - LLCR'
A specific value for LLCR may be preset in a loan agreement contract. This stipulation may be put in by the lender for ease in knowing that the borrower will be capable of making the required interest and principle payments, and if they don't may be subject to a penalty, usually in monetary form.