Effective Loan to Cost (ELTC) calculates the ratio of total funding, including senior debt, mezzanine finance, and certain equity components, to the total development cost of a scheme. In UK property development finance, this provides a fuller picture of project leverage than standard Loan to Cost, which typically considers senior debt alone. The formula is: (Total Funding ÷ Total Development Cost) × 100. ELTC is often used by developers and funders to assess how stacked funding sources affect overall risk and return. It is particularly relevant in complex capital structures where multiple debt layers are involved.
This sits beneath Senior Debt Metrics, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Loan to Total Project Cost (LTPC), as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Effective Loan to Cost (ELTC) is most commonly encountered in connection with Bridge-to-Term Loan within the property development capital stack.
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