Cannot Afford Payments
Taking on new loans can be scary, especially as you start looking at the payments. The ability to make regular monthly payments is required in order to get a term-debt loan. If your monthly payments are $1,000.00, the bank likes to see that your business is producing $1,250.00 in excess revenue. Banks like a cushion called a debt-service coverage ratio (DSCR). The cushion ratio used by most banks is 1.25:1. Some lending programs are willing to do loans at 1.1:1, thus lowering the amount of cash flow needed. There are also some additioanl tricks to help make payments more affordable.
The most effective way to reduce your monthly payment is to lengthen the term of the loan. The interest rate is much less important.
The SCEDC does not help companies refinance existing debt, unless additional capital expenditures are required to grow a company.