Loan to cost (LTC)
Debt divided by the contractually defined eligible project cost.
How it works
Loan to cost (LTC) divides the debt by the cost of the project or assets being financed. An LTC of 70% means lenders fund 70% of the eligible cost and the sponsor funds the rest with equity.
In GPU and data centre deals
LTC is used in data centre construction loans and in GPU facilities, where the cost is the purchase price of the servers and related equipment. In GPU loans it may be combined with a depreciating value so that the permitted debt falls over time. Lenders define eligible costs carefully, often excluding fees, interest and contingencies.
What gets negotiated
- What counts as eligible cost
- Maximum LTC at each draw
- Whether the cost base depreciates
- Equity that must be funded before or alongside debt
Why the distinction matters
State whether the denominator includes land, contingency, interest during construction and taxes. An apparently lower LTC may reflect a broader cost definition.
Read the structure
Funding a build from land and power milestones to a financeable operating asset.
Data centre construction finance ↗In the filed deals
Galaxy's Helios construction loan allows up to 80% LTC; IREN's Hardware 3 sets a 65% depreciating LTC test.
For in-house counsel
Take it to the documents
The filed wording behind GPU and data centre financings, for either side of the table. Previews are open; the full text is free with InfraCompute Weekly.
- Financing clause libraryCash traps, coverage ratios, cures and step-in, from the filed deals.
- Contract libraryGPU contracts, leases, power, equity and JVs, quoted from filed contracts.
- Issues list builderBuild an issues list from the lender’s or the borrower’s side.
- The legal desk for in-house counselContract library, issues lists, checklists and English law notes.
Related terms
Explanatory definition, not a statement that a particular transaction contains this term or a substitute for its contractual definition.
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