{"ok":true,"canonical_url":"https://dealroom.so/glossary/loan-to-cost-ratio","api_url":"https://dealroom.so/api/public/glossary/loan-to-cost-ratio","data_freshness":{"sba_records_through":"2026-05-31","fdic_records_through":"2026-03-31","dealroom_last_updated":"2026-06-15","timezone":"America/Chicago"},"source_summary":["Public SBA 7(a) loan records","FDIC institution data","DealRoom lender and franchise enrichment"],"term":{"slug":"loan-to-cost-ratio","term":"Loan-to-cost ratio","aka":"LTC ratio","group":"The loan itself","definition":"This ratio compares the loan amount to the total project costs. It tells you what percentage of the deal is financed by the loan versus your equity.","what_it_means":"Lenders use the loan-to-cost ratio to assess risk. The SBA has specific maximum ratios for different types of transactions, dictating how much equity you must inject. A higher ratio means more leverage and potentially higher risk for the lender. Understand the required equity injection based on this ratio.","url":"https://dealroom.so/glossary/loan-to-cost-ratio","official_sources":[{"slug":"sop-50-10","title":"SOP 50 10 — Lender and Development Company Loan Programs","official_url":"https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs","official_label":"View on SBA.gov","authority_tier":2,"publisher":"U.S. Small Business Administration","source_guide_url":"https://dealroom.so/sba-7a/sources/sop-50-10"}],"related":[{"slug":"equity-injection","term":"Equity injection","url":"https://dealroom.so/glossary/equity-injection"},{"slug":"total-project-costs","term":"Total project costs","url":"https://dealroom.so/glossary/total-project-costs"},{"slug":"overall-leverage","term":"Overall Leverage","url":"https://dealroom.so/glossary/overall-leverage"},{"slug":"7a-loan","term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"}],"related_questions":[{"question":"What is the debt-to-worth ratio requirement for a $0-down partner buyout?","url":"https://dealroom.so/sba-7a/questions/what-is-the-debt-to-worth-ratio-requirement-for-a-0-down-partner-buyout"},{"question":"What if my personal debt-to-income ratio is high, even with a good credit score?","url":"https://dealroom.so/sba-7a/questions/what-if-my-personal-debt-to-income-ratio-is-high-even-with-a-good-credit-score"},{"question":"What if I have a high debt-to-income ratio personally, even with a good credit score?","url":"https://dealroom.so/sba-7a/questions/what-if-i-have-a-high-debt-to-income-ratio-personally-even-with-a-good-credit-score"},{"question":"How does a lender request an increase to an authorized 7(a) loan amount due to unforeseen project cost increases?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-request-an-increase-to-an-authorized-7-a-loan-amount-due-to-unforeseen-p"},{"question":"Can an SBA 7(a) loan cover the cost of relocating the acquired business to a new facility?","url":"https://dealroom.so/sba-7a/questions/can-an-sba-7-a-loan-cover-the-cost-of-relocating-the-acquired-business-to-a-new-facility"},{"question":"Does the SBA require a specific debt service coverage ratio (DSCR) for approval?","url":"https://dealroom.so/sba-7a/questions/does-the-sba-require-a-specific-debt-service-coverage-ratio-dscr-for-approval"}]},"caveats":["Definitions represent DealRoom's plain-English interpretation for buyers; verify regulatory terms against the official SBA and eCFR sources listed.","Not legal, tax, or financial advice, and not an SBA eligibility determination."],"citation":{"label":"DealRoom.so Glossary — Loan-to-cost ratio","url":"https://dealroom.so/glossary/loan-to-cost-ratio","source_type":"DealRoom Data"}}