Also may be referred to as a leveraged loan or leveraged lending. Finance where the level of debt provided is more than would be considered normal. The borrower of a leveraged loan will generally have a credit rating that is below investment grade.

The lenders in leveraged finance transactions are, therefore, considered to take more risk than normal, and consequently charge a higher interest rate margin. As a result, borrowers will usually only wish to use leveraged finance to achieve a specific objective (such as the acquisition of a company or business, a business recapitalisation, a product-line expansion or to refinance debt). The detail of what constitutes leveraged finance (for example, the margin) will vary between lenders and the sectors they lend to. It will also depend on the particular features of the transaction.