Business Glossary - L


Lease - A contract between the owner (lessor) and the tenant (lessee) stating the conditions under which the tenant may occupy or use the property.

Ledger - a book that contains the totals from all of journals.

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 participate with SBA in the making of loans.

Leveraged Buy-Out - The purchase of a business, with financing provided largely by borrowed money, often in the form of junk bonds.

Liability - A legal obligation to pay a debt owed. Current liabilities are debts payable within twelve months. Long-term liabilities are debts payable over a period of more than twelve months.

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.

Limited Partnership (Lp) - An association of two or more partners formed to conduct a business jointly and in which one or more of the partners is liable only to the extent of the amount of money they have invested. Limited partners do not receive dividends but enjoy direct flow-th

Line-of-credit - A lender agrees to allow a borrower to draw a pre-specified amount from an account on an as needed basis.

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.

Litigation - 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 t

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.