LOC impact on DSCR

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by a searcher from Wabash College
in Chicago, IL, USA

5mos ago

LOC impact on DSCR

Does the underwriting bank assume a full draw on a LOC, for their DSCR calculation? Just wondering if I should be deducting LOC interest payments (assuming full draw) from cash flow for the purposing of calculating an accurate DSCR for the bank.

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reply by a lender 5mos ago
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Yes, most Banks will stress test cash flow assuming the line of credit is fully drawn, so you would want to include that interest in your cash flow analysis. We would be happy to review the transaction for you and see if we can provide any assistance from a financing perspective. You can reach me here or directly at redacted We offer a free review of transactions as well.

reply by a searcher 5mos ago
from Colorado State University in California, USA

Yes, interest only scenario. With SBA express LOCs I have seen interest rate sensitivity testing (2% in each direction) as well. It's all based on policy at your specific lender but at bare minimum interest only with facility fully advanced.