I finally saw how my loan covenants were killing my cash flow

I was looking at my books for a small retail strip in Tampa and realized the debt service coverage ratio covenant on my loan was forcing me to keep way too much cash in the business, leaving nothing for repairs. The bank's quarterly review letter pointed out I was barely hitting 1.25x, which meant I couldn't pull any money out. How do you guys handle renegotiating these ratios when a property's income dips?

3 comments

3 Comments

derek_coleman2mo agoMost Upvoted

Isn't that just how the loan is supposed to work?

barbara_hall92mo ago

You'd think so, right? But they hide fees in the fine print!

evangarcia17d ago

Always take a photo of every single page they hand you before you sign. Saved me a headache with a used car lot last year. They tried to tack on a "documentation fee" and a "vehicle preparation fee" that weren't mentioned anywhere in the ad. I pulled up the phone pic right there at the desk and asked them to point out where I agreed to those. Got them taken off after 20 minutes of back and forth. Also helps to ask for a full breakdown in writing before you even sit down, not after you've already picked out the car.