← 5 Tips on How to Secure a Small Business Loan

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By Anslem Samuel | Published December 6, 2011 | Full size is 620 × 480 pixels

A good debt service coverage ratio. This is the ratio of cash available for debt servicing to interest, principal and lease payments. The banker will calculate this by adding annual net income with amortization/depreciation, interest expense and other things and dividing that sum by the sum of the borrower's loan principal, interest payments and lease payments. “This is the key ratio that most bankers are going to look at,” he says. Dillon states that most banks will consider a debt service coverage ratio of 1.20:1, or 1.25:1 as very good.

A good debt service coverage ratio.

This is the ratio of cash available for debt servicing…

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