18 Business Loan Requirements - Disclosure of Other Debt

18 Business Loan Requirements - Disclosure of Other Debt

When applying for any type of business loan product, the lender will require an accounting of all current outstanding debts. Here is where the Business Debt Schedule comes in. Especially if you are a small business, the lender needs a full picture of what you owe versus what you have coming in. If you are too “debt-heavy” and thus have a number of outstanding loans, then the chances of getting a new business loan may be less than if you were not burdened with such debt.

When calculating the amount that you can, in fact, afford to borrow, the lending institution will use a number called the debt service coverage ratio (DSCR). What this number does is basically compare debt to cash flow. Simply put, the lender will divide your annual net operating income by your annual debt requirements.

The resulting number, generally speaking, should be greater than one, thereby signifying that you can, in fact, pay back any potential loan as well as cover the cost of all current debts. If the number is not greater than one, there is a good chance your application may not qualify. That doesn’t mean, however, that you can’t reapply once you’ve paid off some of that outstanding debt.

Sometimes businesses seek financing to help pay down existing debt. Debt repayment may be possible; however, it is important to have reached certain milestones in terms of the old loans. While this requirement can get a bit confusing, at First Union, we are here to help.

We’d be more than happy to review your current financials and see where you stand as far as your ability to procure new funding. The goal is to ensure that you’re comfortable and not taking on too much debt, as you do not want company operations to suffer. Call today, and let us see what we can do for you!

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First Union Lending LLC is a dually licensed Lender/Broker with its main offices located at 4900 Millenia Blvd First Floor Orlando, FL 32839. First Union Lending LLC and its ads are meant for continental United States, including Alaska and Hawaii small business owners. Business Loans offered by First Union Lending LLC have varying rates and terms that can range from 30 - 120 payments and all rates and terms are based on eligibility of the business and its owners. The actual terms are based on credit, business history, industry, amount and terms. As an example, a $5,000 loan paid over 5 years at 8% would have a total repayment of $6,082.92 over the life of the loan. We use the latest encryption to protect sensitive information transmitted online, as well as run our own secure server network to ensure your information is protected offline as well. California loans made pursuant to the California Financing Law, Division 9 (commencing with Section 22000) of the Finance Code. All such loans made through VBJ Consulting, LLC, a licensed finance lender/broker, California Financing Law License No. CFL#60DBO78163

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