Loan Life Coverage Ratio
The loan life coverage ratio (LLCR) is a financial ratio used to estimate the solvency of a firm, or the ability of a borrowing company to repay an outstanding loan. LLCR is calculated by dividing the net present value (NPV) of the money available for debt repayment by the amount of outstanding debt. LLCR is similar to the debt service coverage ratio (DSCR), but it is more commonly used in project financing because of its long-term nature. The DSCR captures a single point in time, whereas the LLCR addresses the entire span of the loan.