Loan Life Coverage Ratio (LLCR)

Loan life coverage ratio is the present value of all cash available for debt service over the remaining loan term, divided by the loan balance outstanding. DSCR checks one period at a time. LLCR asks the same question once for the full life of the loan.

Project finance lenders use LLCR for wind farms, toll roads and other assets whose income changes year to year. The cash flows are discounted at the loan's interest rate, so a ratio of 1.0 means the projected income repays the debt exactly with nothing to spare.

Rental property lenders rarely calculate it. A leased house or small apartment building has steady rent, so one year's DSCR is a fair stand-in for every year. LLCR matters more when income is expected to grow or fall, such as a building in lease-up.

Further reading: Loan Life Coverage Ratio (LLCR) on Wikipedia.