Debt Service and available cash calculation

by a searcher

1 week ago

I have a question regarding calculating DSCR and what other metrics Banks look at, that are perhaps more valuable than DSCR. 
For example, if DSCR is 1.5 x it may still be a bad deal but DSCR doesn't necessarily reflect the amount of cash available to service debt. 

Are there more important metrics Banks use and if so, what are they?
Any advice when looking at DSCR and cashflow modelling on deals would be appreciated. Thanks

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lender from California State University, Chico

I'd be pretty happy if I saw a loan request for a business with 1.50 debt service, some lenders will require that and some will accept perhaps a little less. That being said if I saw a loan request for a business showing 1.50 debt service but that business had declining trends or very high customer concentrations that might alarm me a bit.

1 week ago | like reply | 0 likes

lender from California State University, Sacramento - College of Business Administration

Thanks ERIC! Strict? How about prudent? Haha. And if you find a biz in one of our verticals the DSC is around 1.25/1.35. We are looking for 1.5 DSC in agnostic industries.

Happy to have folks join our weekly sessions. We talk qualitative stuff in addition to the DSC. Customer concentrations ties to seller licensing. All this other STUFF matters too. --@----.com

1 week ago | like reply | 1 like

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