Global debt service helps a lender understand the additional cash flow and debt obligations across your entire personal and business financial statement.
Let’s say you have two other partners.
They can help or hinder the deal.
Yesterday’s post shows the company offered 2.70 debt service ratio with the lone financials.
The global debt service pulled the ratio to a bank minimum of 1.20. Why?
Look at:
- Guarantor 1’s Debt Obligations – maybe he/she has a lot of credit card or auto payments compared to their personal cash flow.
- Affiliate 1 and 2’s Debt Obligations – perhaps these are start-up that are on their way to profitability or they’re having a tough year.
| Personal Cash Flow – Guarantor 1 | $ 81,500 |
| Personal Cash Flow – Guarantor 2 | $ 125,000 |
| Personal Cash Flow – Guarantor 3 | $ 65,000 |
| EBITDA – Operating Company | $ 650,000 |
| EBITDA – Affiliate 1 | $ 195,000 |
| EBITDA – Affiliate 2 | $ 120,000 |
| Total Existing Cash Flow | $ 1,236,500 |
| Personal Debt – Guarantor 1 | $ 305,000 |
| Personal Debt – Guarantor 2 | $ 20,000 |
| Personal Debt – Guarantor 3 | $ 45,000 |
| Existing Debt – Operating Company | $ 150,000 |
| Existing Debt – Affiliate 1 | $ 180,000 |
| Existing Debt – Affiliate 2 | $ 190,000 |
| Proposed New Financing | $ 143,819 |
| Total Debt Service | $ 1,033,819 |
| Excess Cash Flow | $ 202,681 |
| Global Debt Service Ratio | 1.20 |
Underwriting can frustrate a borrower because it sounds like the lender is looking for a way not to approve your loan.
Not true.
Any check writer needs a margin of safety to ensure they can recover their investment.
Understanding your debt service ratio offers you a key performance indicator to seek and obtain financing successfully.
Part 2 of 2 – SECRET SAUCE – What do lenders do with all your financial information when you’ve made a financing request?
Global debt service helps a lender understand the additional cash flow and debt obligations across your entire personal and business financial statement.
Let’s say you have two other partners.
They can help or hinder the deal.
Yesterday’s post shows the company offered 2.70 debt service ratio with the lone financials.
The global debt service pulled the ratio to a bank minimum of 1.20. Why?
Look at:
- Guarantor 1’s Debt Obligations – maybe he/she has a lot of credit card or auto payments compared to their personal cash flow.
- Affiliate 1 and 2’s Debt Obligations – perhaps these are start-up that are on their way to profitability or they’re having a tough year.
| Personal Cash Flow – Guarantor 1 | $ 81,500 |
| Personal Cash Flow – Guarantor 2 | $ 125,000 |
| Personal Cash Flow – Guarantor 3 | $ 65,000 |
| EBITDA – Operating Company | $ 650,000 |
| EBITDA – Affiliate 1 | $ 195,000 |
| EBITDA – Affiliate 2 | $ 120,000 |
| Total Existing Cash Flow | $ 1,236,500 |
| Personal Debt – Guarantor 1 | $ 305,000 |
| Personal Debt – Guarantor 2 | $ 20,000 |
| Personal Debt – Guarantor 3 | $ 45,000 |
| Existing Debt – Operating Company | $ 150,000 |
| Existing Debt – Affiliate 1 | $ 180,000 |
| Existing Debt – Affiliate 2 | $ 190,000 |
| Proposed New Financing | $ 143,819 |
| Total Debt Service | $ 1,033,819 |
| Excess Cash Flow | $ 202,681 |
| Global Debt Service Ratio | 1.20 |
Underwriting can frustrate a borrower because it sounds like the lender is looking for a way not to approve your loan.
Not true.
Any check writer needs a margin of safety to ensure they can recover their investment.
Understanding your debt service ratio offers you a key performance indicator to seek and obtain financing successfully.
