Loan-to-Value (LTV)
Loan-to-value, or LTV, is the ratio of a loan amount to the appraised value of the collateral securing it, expressed as a percentage. A $7,000,000 loan against a property worth $10,000,000 has an LTV of 70 percent. It is a core measure of how much equity cushion stands between the lender and a loss.
How LTV is used in lending
LTV is most associated with commercial real estate and asset-backed lending, where a loan is sized as a percentage of appraised value. It is closely related to the advance rate in factoring and ABL, the same idea applied to receivables or inventory. Lenders set a maximum LTV by asset type and risk.
LTV versus DSCR and debt yield
LTV is a value-based test and says nothing about whether the asset produces enough cash to service the debt, which is what the debt service coverage ratio and debt yield measure. Lenders use all three together. Zolvo keeps collateral, balances, and these metrics current across commercial real estate and bridge books through portfolio monitoring.