Thursday, April 21, 2011

SBA loans for self storage facilities- cash flow

For SBA loans, the borrower’s ability to repay the loan from the cash flow of the business is the most important consideration in the loan making process.

SBA allows lenders to determine repayment ability through either an analysis of actual cash flow or by using the “rule of thumb” method. “Rule of thumb” cash flow is defined as earnings before interest and taxes, plus depreciation and amortization, less total debt service.

If a self storage facility can demonstrate repayment ability based upon this rule of thumb approach, it can most likely obtain a SBA loan.

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