Glossary · Reading the business
Pro Forma Debt Service Calculation
In short
This calculation projects the business's future cash flow to see if it can afford the new loan payments. It tells you if the business generates enough profit to cover all its debt obligations after you buy it.
What it means in a deal
Lenders use this to assess repayment capacity for your SBA loan. You'll need to understand the assumptions behind the pro forma, especially any add-backs or projected growth, to ensure they're realistic and not overly optimistic. Your deal hinges on the business's ability to service this debt.
Official sources
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Pro Forma Debt Service Calculation
- How does a seller note on full standby affect the debt service coverage ratio calculation?
- Does the SBA require a specific debt service coverage ratio (DSCR) for approval?
- When is a debt service coverage ratio waiver or exception possible for an acquisition?
- What level of debt service coverage ratio (DSCR) does an SBA 7(a) lender typically look for?
- How does the SBA evaluate 'prudent lending standards' in 7(a) loan underwriting regarding debt service coverage?
- How does a seller note on partial standby affect an SBA 7(a) loan's debt service coverage ratio?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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