Debt Service Coverage Ratio 101: Get Your Credit Team To Approve Your Deal!
Nov 15, 2022It is very easy to build a ton of credibility with your credit manager or your credit team! If you make an effort to consistently deposit into your “credibility account”, you will get more deals approved faster! First, make sure that you are recommending the credit product that best matches the clients credit request. Second, make sure that business type and collateral are aligned with your credit policy. Thirdly, make sure that the deal meets or at least gets very close to meeting the minimum debt service coverage requirement. If you consistently do this, your approval ratio will sky-rocket! Why? The short story is that…in a way…you are doing the credit team’s job for them! Why would you want to do this? It significantly increases the likelihood that your credit team will approve your deals! If you do this on every deal you submit to them, you will start go gain their trust and they will start “accepting” your approval recommendations! Yes, it is that easy!
But wait, how to do you calculate DSCR? I recently came across an article written by the good people at Forbes. See article link below. The article reinforces the importance of the DSCR (Debt Service Coverage Ratio). The article talks about the importance of the DSCR, but does not tell you how to calculate it for Business Banking purposes. Don’t worry! I got you covered here! I created the Commercial Lending Toolkit. It is a free course on all things commercial lending…including a detailed explanation on how to gauge the financial strength of a business, identify and address weaknesses, and estimate how debt the business will support…before you submit your deal to the credit team! It also includes worksheets that you can use to calculate the Debt Service Coverage Ratio. You can access the free Commercial Lending Toolkit at www.bizpetrol.com.
I strongly encourage you to read the article. See article link below. It is a quick read. If you don’t know how to calculate DSCR, I strongly encourage you to take the Commercial Lending Toolkit for a test-drive! You can complete it in less than a day, you can access it anywhere, anytime and on any device! It will help you get a few more deals done this year and get you closer to meeting your production goals!
Bizpetrol has information, knowledge and tools that will help you become a Business Banking Rockstar. You can start elevating your business credit skills using the free Commercial Lending Toolkit at www.bizpetrol.com. You can see all the Business Banking News articles (like this one) at www.bizpetrol.com/blog. You can access a series of how-to business banker guides https://www.bizpetrol.com/Downloads-Free.
Follow #bizpetrol on LinkedIn if you want to see more articles like this one in your feed! If you found this article to be useful, please do me a huge favor and spread the knowledge by sharing the article with your colleagues!
Article Title: Understanding The Debt Service Coverage Ratio—The Backbone Of Commercial Real Estate
