LEASE A contract between the owner (lessor) and the tenant (lessee) stating the conditions under which the tenant may occupy or use real estate or equipment. Terms usually include a specific period of time and a predetermined rate.

LEASE RATE The period rental payment to a lessor for the use of assets. It may also be considered as the implicit interest rate in minimum lease payments.

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.

LESSEE The user of equipment or property being leased.

LESSOR The party to a lease agreement who has leagl or tax title to equipment or property, who grants the lessee the right to use the equipment or property for the lease term, and who is entitled to the rental fees.

LEVERAGED BUY-OUT The purchase of a business, with financing provided largely by borrowed money, often in the form of junk bonds.

LIABILITY Debt owed by the company such as bank loans or accounts payable.

LICENSE – LICENSES – BUSINESS REGISTRATION Businesses are licensed and registered at local and state levels of government. Each state has their own mechanism or criteria for obtaining licenses.

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.

LINE OF CREDIT A short-term loan, usually less than one year.

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.

LIQUID ASSETS Cash, checks and easily-convertible securities available to meet immediate and emergency needs.

LIQUIDATION VALUE The net value realizable in the sale (ordinarily a forced sale) of a business or a particular asset.

LITIGATION Refers to a loan in “liquidation status” which has been referred attorneys for legal action. Also: The practice of taking legal action through the judicial process.

LOCAL SBA OFFICES The U.S. Small Business Administration’s (SBA) maintains offices in all States, Puerto Rico, and Guam.

LOAN AGREEMENT Agreement to be executed by borrower, containing pertinent terms, conditions, covenants and restrictions.

LOANS – Pollution Control Loan Program Pollution Control Loans are intended to provide loan guarantees to eligible small businesses for the financing of the planning, design, or installation of a pollution control facility. This facility must prevent, reduce, abate, or control any form of pollution, including recycling.

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 the loan is to be completely paid off. This amount, known as accrued interest, is combined with the latest principal and escrow balances that are applicable to what is now referred to as the loan payoff amount. In the case where prepaid interest exceeds the accrued interest the latter is subtracted from the former and the difference is used to reduce the total amount owed.

LONG TERM Period usually greater than one year.

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.