Glossary · The loan itself
Loan-to-value ratio(LTV)
In short
How much the loan covers compared to the value of the assets being purchased or used as collateral. Buyers care because a lower ratio means more equity injection is needed, but also stronger loan approval prospects.
What it means in a deal
While not a direct SBA eligibility factor for business acquisitions, lenders use LTV to assess risk, especially when real estate or equipment is primary collateral. For a business acquisition, the SBA focuses more on cash flow and equity injection. You'll see this concept come up if you're financing commercial real estate as part of the deal.
Related terms
Common questions about Loan-to-value ratio
- What is the debt-to-worth ratio requirement for a $0-down partner buyout?
- What if my personal debt-to-income ratio is high, even with a good credit score?
- What if I have a high debt-to-income ratio personally, even with a good credit score?
- Does the SBA require a specific debt service coverage ratio (DSCR) for approval?
- When is a debt service coverage ratio waiver or exception possible for an acquisition?
- How does a seller note on full standby affect the debt service coverage ratio calculation?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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