Loan-to-Value (LTV)
The ratio of a loan amount to the appraised value of the asset securing it, expressed as a percentage, used to gauge how much equity or cushion exists in the deal.
A lower LTV means the borrower is financing a smaller share of the asset’s value, which generally reduces the lender’s risk and can support better rates or terms, while a higher LTV means less cushion if the asset’s value declines or needs to be sold.
LTV is central to real estate and equipment financing in particular, where the pledged asset’s appraised value directly drives how much a business can borrow.
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