When you are reviewing a commercial loan application you have to analyze several crucial issues to justify your findings. One of the imperative matters is the ability of the debtor to pay off the loan you will sanction. Scrutinizing the new commercial loan and income available for debt servicing, this calculator is committed to find out the monthly payment, earnings before interest, tax, depreciation, amortization, and rent (EBITDAR), and debt service coverage (DSC).
New loan amount
The amount of the new commercial loan.
Amortization in years
Duration (in year) of the repayment.
The percentage rate of interest charged on the loan. This rate is converted to monthly equivalents.
New monthly payment
Monthly payment to be made on the new loan.
The debtor’s earnings before interest, taxes, depreciation, amortization, rent, and management fees.
Provision for management costs
The amount of money kept separated to meet management costs. This provision is at least 5% of the total revenue.
The debtor’s earnings before interest, taxes, depreciation, and rent. After deducting the provision for management costs from the EBITDARM you will get the balance for EBITDR.
Provision for capital expenditures
The amount of money kept separated for the purpose of capital expenditure. This provision is used to meet the capital requirements for ongoing operations.
Debt service coverage (DSC)
The DSC is calculated as total annual net cash income divided by total annual debt services. If you can manage a Debt Service Ratio (DSC) of at least 1.25, it is fair that you expect your loan application to be approved.