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Small Business Loan Cash Flow

SBASmall Business LoanSBA

1. The business must be able to pay the monthly debt service on all debt.
2. Ancillary revenue can increase your credibility.
3. The company must also have enough working capital to finance its growth during expansion.

Analyzing Cash Flow Coverage

1. A debt coverage ratio of 1/15 means:
-The business must pay $1.15 for every $1.00 debt services.

2. The goal for debt coverage ratio (DCR) is 1.25
- $ 1.15 in cash flow for every $ 1.00 in debt services.

Steps Involved with the  504 Lending Decision

1. Structure “bank only” financing.
2. Determine the amount of the bank loan.
3. Determine the amount of cash equity required.
4. Determine the debt service requirements.

Structure the 504 Financing

Ask the lending questions.

  • Does the business have the cash equity?
  • Can the business make all of the debt service payment?
  • Does the business have the sufficient cash and /or cash flow for working capital needs?