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Commercial Lending Terminology
| Assumable Loan – loan with an option to transfer the note to another borrower, usually for a fee of 1% |
| CLTV – Combined Loan to Value, ratio between sum of both lender’s and seller’s notes and value of the underlining asset |
| DSC – Debt Service Coverage, ratio between a cash flow of the project and debt service (mortgage payment) of the note |
| LTV - Loan to Value, ratio between loan amount and value of the underlining asset |
| Non-Recourse - personal guarantees are not required, borrower is only risking the assets in the project |
| PPP – Prepayment Penalty- provision of the note that penalizes early repayment |
| Potential Rental Income - is the annual amount that would be realized if the property is fully leased or rented at the scheduled rate. |
| Stabilized property – property that is already in an operational condition and lease up period is complete |
| Vacancy and Collection Loss - is rental income lost because of vacancies or tenants' failure to pay rent |
Below are the most commonly used terms in commercial lending
