Commercial Lending Glossary
Plain English definitions of the terms lenders, brokers, and investors use every day. Formulas, worked examples, and why each one matters to your deal.
Terms A to Z
Browse the vocabulary of commercial real estate and business financing, from debt service coverage ratio to the capital stack.
B
C
Capital Stack
The layers of financing in a deal, ranked by repayment priority from senior debt to common equity.
Read DefinitionCapitalization Rate (Cap Rate)
The ratio of net operating income to property value, used to gauge return and estimate what a property is worth.
Read DefinitionCash on Cash Return
Annual pre tax cash flow divided by the cash invested, measuring the yield on your equity.
Read DefinitionD
L
Loan to Cost Ratio (LTC)
The loan amount as a percentage of total project cost, used mostly on construction and value add deals.
Read DefinitionLoan to Value Ratio (LTV)
The loan amount as a percentage of a property's appraised value, showing how much of the purchase a lender will finance.
Read Definition