What type of loan is referred to as leverage loans?

The correct choice highlights that leveraged loans are primarily extended to companies that already have significant levels of existing debt. These loans are characterized by their higher risk profile, as they often fund acquisitions, buyouts, or other leveraged transactions for entities that may already have substantial financial obligations.

In leveraged finance, these loans typically come with higher interest rates compared to traditional loans, reflecting the increased risk lenders take on when lending to highly leveraged firms. These companies may have limited cash flow relative to their debt load, making the potential for default a point of concern for lenders.

The other options refer to different circumstances or types of loans that do not fit the definition of leveraged loans. For instance, loans to startups tend to be considered high-risk but not necessarily leveraged in the same sense. Loans to companies with low debt focus on firms that have low financial leverage and typically represent a more stable borrowing profile. Lastly, government-issued loans are distinct as they are often provided under specific programs with lower rates and do not inherently reflect the leverage or financial health of the borrowing company in the same manner as leveraged loans do.