Non-Accrual Loan
Plain-English definition
A non-accrual loan is a loan on which a lender has stopped recognizing some or all contractual interest as current income because collection has become sufficiently uncertain under its accounting policy.
Why it matters
Non-accrual status can reduce reported investment income and identify borrowers experiencing stress. Reported percentages should be checked at both cost and fair value because the two measures answer different questions.
Example
A BDC may place a troubled loan on non-accrual and stop recording its stated interest. If the borrower later cures the default or the loan is restructured, the BDC may restore accrual treatment according to its policy.
How income investors use it
Review the amount, trend, concentration, cost, fair value, and subsequent resolution of non-accrual investments. Read the specific BDC's policy because triggers and partial-accrual treatment can differ.
Fly High perspective
Credit quality informs individual-security analysis when it affects earning power. Fly High does not turn non-accruals into a separate mandatory durability score. Earnings remain the primary methodology signal.
This material is general education, not individualized investment, tax, or legal advice.