Getting ready to apply for a commercial loan, but feel overwhelmed by the application process? This is part of a series of posts explaining the different documents requested during a commercial loan application. Next up: the Business Debt Schedule.
What Is a Business Debt Schedule?
A Business Debt Schedule is a summary of all the debts owed by your business. The debt schedule will list information per debt such as:
- Date Received
- Type of Debt (Credit Card, Installment, Line of Credit, etc.)
- Original Balance
- Current Balance
- Monthly Payment
- Interest Rate
- Loan Term
Why Do Banks Need a Business Debt Schedule?
A complete and accurate Business Debt Schedule is needed by bankers to assess whether the current loan request will be affordable alongside the business's existing debt repayment obligations. With a complete Business Debt Schedule and current financials, you can determine your Debt Service Coverage Ratio to put the loan request into greater context and see how much cash will remain in your business after paying all of your debts.
A Business Debt Schedule is also used by bankers to see if a debt refinance or a debt payoff could help strengthen the business's financial performance and help keep overall debt service healthy. Who knows — you might start a meeting with your banker looking to purchase a piece of equipment, but with a detailed business debt schedule and set of business financials, you may leave your meeting with a path towards cheaper debt service or a lower debt balance!
How a Debt Schedule Guides the Conversation
A Business Debt Schedule is a great tool to guide a conversation with your banker and work on maintaining affordable and productive debt within your business.
Have more specific questions on the Business Debt Schedule, or need help completing one as a part of your loan request? Please feel free to reach out — I would be happy to help!
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