This is the most common factor banks will look at when determining the strength of a business during the underwriting process for a loan. DSCR is a formula used to measure a business’s ability to repay its debt. More importantly, lenders will calculate your Debt Service Coverage Ratio (DSCR). Generally, most banks will consider household income, business revenue, cash flow, outstanding debt, unused credit lines, and the amount of money the owner has personally invested into the business. Both a commercial lease and a purchase agreement are contracts between two parties. The difference between a commercial lease and a purchase agreement has a lot to do with the verbiage used – renting/leasing vs buying.
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