LEASE – A contract between the owner (lessor) and the tenant (lessee) stating the conditions under which the tenant may occupy or use real estate or equipment. Terms usually include a specific period of time and a predetermined rate.
LEASE RATE – The period rental payment to a lessor for the use of assets. It may also be considered as the implicit interest rate in minimum lease payments.
LEGAL RATE OF INTEREST – The maximum rate of interest fixed by the laws of the various states, which a lender may charge a borrower for the use of money.
LENDING INSTITUTION – Any institution, including a commercial bank, savings and loan association, commercial finance company, or other lender qualified to make loans.
LESSEE – The user of equipment or property being leased.
LESSOR – The party to a lease agreement who has leagl or tax title to equipment or property, who grants the lessee the right to use the equipment or property for the lease term, and who is entitled to the rental fees.
LEVERAGED BUY-OUT – The purchase of a business, with financing provided largely by borrowed money, often in the form of junk bonds.
LIABILITY – Debt owed by the company such as bank loans or accounts payable.
LICENSE, LICENSES & BUSINESS REGISTRATION – Businesses are licensed and registered at local and state levels of government. Each state has their own mechanism or criteria for obtaining licenses.
LIEN – A charge upon or security interest in real or personal property maintained to ensure the satisfaction of a debt or duty ordinarily arising by operation of law.
LINE OF CREDIT – A short-term loan, usually less than one year.
LIQUID ASSETS – Cash, checks and easily-convertible securities available to meet immediate and emergency needs.
LIQUIDATION – The disposal, at maximum prices, of the collateral securing a loan, and the voluntary and enforced collection of the remaining loan balance from the obligators and/or guarantors.
LIQUIDATION VALUE – The net value realizable in the sale (ordinarily a forced sale) of a business or a particular asset.
LISTSERVER – A service where in individuals can subscribe to and receive publications by electronic mail.
LITIGATION – Refers to a loan in "liquidation status" which has been referred attorneys for legal action. Also: The practice of taking legal action through the judicial process.
LOAN AGREEMENT – Agreement to be executed by borrower, containing pertinent terms, conditions, covenants and restrictions.
LOAN PAYOFF AMOUNT – The total amount of money needed to meet a borrower’s obligation on a loan. It is arrived at by accruing gross interest for one day and multiplying this figure by the number of days that exist between the date of the last repayment and the date on which the loan is to be completely paid off. This amount, known as accrued interest, is combined with the latest principal and escrow balances that are applicable to what is now referred to as the loan payoff amount. In the case where prepaid interest exceeds the accrued interest the latter is subtracted from the former and the difference is used to reduce the total amount owed.
LOANS 7(A), Loan Guaranty Program Financing Your Business 7(A) – The 7(a) Loan Guaranty Program is one of SBA’s primary lending programs. It provides loans to small businesses unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders that provide loans which are, in turn, guaranteed by the SBA – the Agency has no funds for direct lending or grants.
LOANS (Pollution Control Loan Program) – Pollution Control Loans are intended to provide loan guarantees to eligible small businesses for the financing of the planning, design, or installation of a pollution control facility. This facility must prevent, reduce, abate, or control any form of pollution, including recycling.
LONG TERM – A Period usually greater than one year.
LOSS RATE – A rate developed by comparing the ratio of total loans charged off to the total loans disbursed from inception of the program to the present date.
LOSS RESERVE ADJUSTMENT RATE – A reserve rate based upon the ratio of the aggregate net chargeoffs (chargeoffs less recoveries) for the most recent five years to the total average loans outstanding for the comparable 5-year period.
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