Late Charges: Amounts accrued and assessed on a delinquent debt; the term includes administrative costs, penalties, and additional interest.
Letter of Credit: A form of loan from a financial institution to be used only in the instance of a shortfall in net revenue for debt service (i.e., a contingent loan). A letter of credit is security provided directly to the lender/bondholders (via a bond trustee), rather than to the borrower/project sponsor.
Leverage: A financial mechanism used to increase available funds usually by issuing debt (typically bonds) or by guaranteeing or otherwise assuming liability for others' debt in an amount greater than cash balances.
Leveraging Ratio: Measures the extent to which a given investment attracts additional capital. In the context of this report, the leveraging ratio of federal funds is equal to the total project costs divided by the budgetary cost of providing federal credit assistance.
Liability: Amount owed (i.e., payable) by an individual or entity, such as for terms received, services rendered, expenses incurred, assets acquired, construction performed, and amounts received but not yet earned.
Line of Credit: A form of loan to be used only in the instance of a shortfall in net revenue for debt service or other financial commitments (i.e., a contingent loan). A line of credit, while similar to a letter of credit, is security available directly to the borrower/project sponsor with flexibility in use of the funds.
Liquidation: Process of converting collateral to cash.
Liquidity: Refers to an investor's ability to sell an investment as a means of payment or easily convert it to cash without risk of loss of nominal value.
Litigation: Legal action or process taken for full or partial debt recovery.
Loan Guarantee Commitment: Binding agreement by a federal agency to make a loan guarantee when specified conditions are fulfilled by the borrower, the lender, or any other party to the guarantee agreement. (OMB Circular No. A-11)
Loan Guarantee: Contingent liability created when the federal government assures a private lender who has made a commitment to disburse funds to a borrower that the lender will be repaid to the extent of a guarantee in the event of default by the debtor.
Loan Guarantee Subsidy Cost: Estimated long-term cost to the federal government of loan guarantees calculated on a present value basis, excluding administrative costs. The cost is the present value of estimated net cash outflows at the time the guaranteed loans are disbursed by the lender. The discount rate used for the calculation is the average interest rate (yield) on marketable Treasury securities of similar maturity to the loan guarantees, applicable to the time when the guaranteed loans are disbursed.
Loan Servicer: A public or private entity that is responsible for collecting, monitoring, and reporting loan payments. In the context of this report, a loan servicer would also assist in originating the loan.
Loan: Legally binding document which obligates a specific value of funds available for disbursement. The amount of funds disbursed is to be repaid (with or without interest and late fees) in accordance with the terms of a promissory note and/or repayment schedule.
Loan-to-Value Ratio: Represents the proportion of the amount of a loan to the value being pledged to secure that loan. It is derived as follows: total financing costs (i.e., the market value of the collateral plus the financed portion of any closing costs, insurance premiums, or other transaction-related expenses less the borrower's cash downpayment) divided by the market value of the collateral. |
