SBA and bank loans

Your lender asked for projections.

Financial projections, in a lender's hands, are one question: can the business make the payment? Most of the file comes down to one comparison. The profit you have left over in a year goes up against what the loan costs you in that year.

Build the full projections with the loan below already in, or put your own loan in first.

That comparison is called debt service coverage, and it's the profit before interest, tax and depreciation divided by the loan payments for the year. Most SBA lenders want to see at least 1.25, which is a dollar and a quarter of profit for every dollar of payment.

Put your loan in below and you'll see the payment, a year of payments, and the profit it takes to clear 1.25. The lender sets its own test and looks at a lot more than this, so read it as the arithmetic rather than the answer.

What the full model adds

• All three statements, month by month: what you earned, what you own and owe, and where the cash went.
• Coverage worked out each year from your own revenue and costs, instead of a profit figure you typed in.
• The month your cash sits lowest, and how low it goes, which is the other thing a lender reads.
• A Sources and Uses page and a written Management Discussion whose figures move when the plan moves.

Building a plan is free. Saving it to an account, Excel and the print pack come with a paid plan, and the pricing page lists what each one holds.